A Look at an Insurance Company’s Balance Sheet

“Given all that’s going on, is the annuity really a safe place to have money?”

This question has come up a lot whenever an economic mayhem happens.

Back in 2020, one local client who is a good friend, called to ask this specific question.

My answer was that there has never been a better time. Insurance products were created for times like these and I think that it would be a good idea to illustrate that. I’ve never been into recreating the wheel so I found a marketing piece from Midland National Life, my current #1 recommendation, that spells it out perfectly.

On the balance sheet, you’ll see over $57B in assets. When you buy an annuity, your money goes onto this side of the balance sheet. Every dollar you put in is backed by a dollar worth of assets. What makes it so stable is the following point: in addition, the company holds over $38B in life and annuity reserves.

When people talk about safety I am quick to remind everyone that companies like this are among the strongest financial institutions in the world. Failure of a company at this level would shake the foundations of modern capitalism and if that happened you should probably be more worried about looting the grocery store.

Think back to the dot com bubble in 2000 and the credit crisis of 2008. In the fallout after both of those, there were major companies that just didn’t exist anymore, a 100% loss for some people. The stability of insurance companies shines during times of uncertainty. If every corporation and individual were similarly capitalized to handle economic calamity then we wouldn’t be seeing all this carnage in the stock market.  But the pursuit of short-term profits brings risks that most people don’t realize until it’s too late. Click the link here to view Midland’s Balance Sheet.

If you have any questions feel free to give me a call.



Make an appointment

Last Updated on November 24, 2023 by Bryan Anderson