old companies
I have a great concern about old annuity companies. I have a lst of companies from 1995 and was calling their 800 numbers and trying to get their web sites up. I am finding that MANY of these companies have been “taken over” by other companies. I have a variable annuity throgh Fidelity but the subaccounts are with other companies. The annuity is for my 12 year old so we are looking at a 50 year time span. My question is how safe is the money and what happens when a company takes over the account. Is the money just transfered or is it lost. What protections are there.
Permalink Submitted by Alan Spross on Mon, 2011-07-25 23:21
In many respects your VA is safer than a fixed annuity would be because the sub accounts are basically mutual funds where you own shares. With a fixed annuity, you have turned the entire amount over to the insurance company so your security is limited to the full faith and credit of that company plus some potential recovery from your state guarantee fund. The companies offering the sub accounts can be merged or acquired by other companies, but your risk with the sub accounts is pretty much limited to market risk, not company insolvency.
Permalink Submitted by Lee Martinson on Wed, 2011-07-27 14:25
When companies are taken over or renamed or merged etc. it is just a money transfer and your money is still safe. MAny times the transfer is just a buy out.
States also have back up insurance against carrier insolvency. The insurance varies from state to state. For example, in California a person is insured for 80 cents on the dollar up to $100,000 with an aggregate of $250,000.
You can lose money, but historically it has been very seldom. Usually even when a company is in trouble, the policies are picked up by another carrier and you money continues exactly as is.
Lee