Why Are Annuities Safe?
Its all about the money. Annuities are safe because the insurance company issuing the annuity contract- obligating themselves to whatever specific guarantee you are buying- is in the business of making money and having money available at all times to pay claims.
Insurance companies offer a guaranteed benefit to you, be it life insurance, home insurance, or an annuity. You chose to do business with them because of their strength and the guarantee they offer you backed by that strength. They collect premiums from you, invest those premiums, and must have the strength to back those guarantees up.
It’s all about the money- yours to them, then their strength and their money coming back to you.
You want your insurance company to be in the money- to always pay when you need them to pay. You need a rock.
You may not know, but Warren Buffet’s fortune is founded on the insurance industry. Premiums are a source of investment capital to him, and his adroit management of those premiums produced outsized returns for the insurance company (and stockholders) and rock solid guarantees to his insured customers thru Berkshire and GEICO and General RE and many other brands.
Those same insurance carriers that make boatloads of money for Berkshire Hathaway also can easily afford to pay out life insurance benefits to a young insured customer who dies in an accident just a few months after buying the policy…
That’s exactly why the young should own life insurance – to cover the what-if, worst case scenarios of life. And insurance companies who know mortality tables know they will always come out OK, even when an unfortunate accident happens and millions of dollars in life insurance benefit is paid out on a new policy.
The have the money, they manage it conservatively and they pay when called upon.
And it’s exactly why you should consider annuities.
People converting assets into income for retirement can and do benefit, every day, from the same mortality table calculations… from the same economics… from the same strong companies…. with annuities.