Printable checklist for your desk
Print this checklist and fill it in for every company you are comparing.
Download the PDF (large print)The short version. An annuity guarantee is a promise from the insurance company. It is not backed by the FDIC. If the company fails, your state guaranty association may cover your contract up to a limit that depends on your state. Check the company's financial strength, its complaint record, and the seller's license. [1, 2, 3]
What the guarantee depends on
FINRA says annuities are guaranteed only as long as the issuing insurance company remains in business. The SEC warns that if the company has financial difficulties, it may not be able to pay you. State insurance regulators oversee the financial health of insurers. The FDIC lists insurance and annuity products among those it does not insure. [1, 2, 4]
State guaranty associations
Every state has a guaranty association that steps in when an insurer fails. Coverage is provided by the state where the contract owner lives. Limits apply to the present value of annuity benefits. For the states where Nazim is licensed, as reported by NOLHGA (data as of June 1, 2025, and subject to change):[3, 5, 7]
| State | Annuity coverage limit (present value) |
|---|---|
| Virginia | $250,000 |
| Texas | $250,000 |
| Alabama | $250,000 |
| Tennessee | $250,000 |
| Georgia | $250,000 deferred; $300,000 in payout status |
| New Jersey | $250,000 deferred; $500,000 in payout status with no cash surrender value |
| District of Columbia | $300,000 (as reported by NOLHGA) |
Confirm your own state's current limit with your state guaranty association before relying on this table.
- Guaranty associations are not federal programs, and the Wisconsin Office of the Commissioner of Insurance cautions that the fund should not be relied upon to eliminate all risk of loss, and that significant delays often occur in a liquidation. [6]
- Indexed annuities are covered, but most guaranty association laws have special provisions that can exclude index-linked interest or value not yet credited. [7]
Reading a financial strength rating
AM Best publishes a Financial Strength Rating scale as its opinion of an insurer's ability to meet ongoing obligations. AM Best states that a rating is not a recommendation to purchase, hold, or terminate any contract. [8]
| Rating | AM Best category |
|---|---|
| A++, A+ | Superior |
| A, A- | Excellent |
| B++, B+ | Good |
| B, B- | Fair |
| C++, C+ | Marginal |
| C, C- | Weak |
| D | Poor |
| E, F, S | Under regulatory supervision, in liquidation, or rating suspended |
Other rating agencies use their own scales. Look at more than one source and at the date of the rating.
Check the company and the seller
- Complaints: the NAIC Consumer Insurance Search compiles closed, confirmed complaints from state insurance departments, filterable by company, state, and insurance type. [9]
- Licensing: your state insurance department licenses companies and agents and often offers an online license lookup. You can find your department through the NAIC. [10]
- Disciplinary history for securities: if a variable annuity or RILA is involved, FINRA BrokerCheck and the SEC adviser search show registration and history. [1, 2]
The best-interest standard
When an agent recommends an annuity, NAIC Model 275 requires acting in the best interest of the consumer, without putting the producer's or insurer's financial interest ahead of yours, and meeting duties of care, disclosure, conflict of interest, and documentation. The NAIC reported that 49 jurisdictions had implemented the 2020 revisions as of August 2025. Virginia's rule took effect September 1, 2021. For variable annuities and RILAs sold by broker-dealers, SEC Regulation Best Interest applies. [11, 12, 13, 14]
Ask how the seller is paid
The NAIC guide says insurance companies usually pay the annuity salesperson after the sale and suggests you ask how they earn money from it. FINRA also advises asking how the seller is compensated. [15, 16]
A safety checklist
- What is the insurer's current financial strength rating, from which agency, and when was it issued?
- What is the complaint record on the NAIC Consumer Insurance Search?
- What is my state's guaranty association limit, and how much am I putting into this contract?
- Is the seller licensed in my state, and how are they paid?
- Have I spread large amounts across more than one company if that makes sense for me?
Frequently asked questions
Are annuities insured by the FDIC?
No. FINRA says annuities are not guaranteed by the FDIC or other federal agencies. They are guaranteed by the issuing insurer, with a state guaranty association backstop up to set limits.
What is the guaranty association limit for annuities?
Most states use $250,000 of present value, with exceptions. For example Georgia is $250,000 deferred and $300,000 in payout status, and New Jersey is $500,000 in payout status. Confirm your own state's limit.
How can I check an insurer's complaint record?
Use the NAIC Consumer Insurance Search, which compiles closed, confirmed complaints reported by state insurance departments.
Sources and review notes
- SEC Investor.gov: Annuities
- FINRA: Annuities
- NOLHGA: How you're protected (coverage limits as of June 1, 2025)
- FDIC: What is and is not FDIC insured
- NOLHGA: Guaranty association laws (including Va. Code 38.2-1700)
- Wisconsin Office of the Commissioner of Insurance: annuity consumer guide (PI-214, R 09/2025)
- NOLHGA: Product coverage FAQs
- AM Best: Guide to Best's Credit Ratings (October 6, 2023)
- NAIC: How to file a complaint and research complaints against insurance carriers (September 2022)
- NAIC: Insurance department help and licensing lookups
- NAIC Model 275: Suitability in Annuity Transactions (2020 revision)
- NAIC: Government affairs brief on the annuity best interest model (August 2025)
- Virginia Administrative Code, 14VAC5-45: Rules governing suitability in annuity transactions
- SEC: Regulation Best Interest compliance guide
- NAIC: Buyer's Guide to Fixed Deferred Annuities (revised 2013)
- FINRA: Annuities (questions to ask, including how the seller is compensated)
About this guide. This is general education, not tax, legal, or investment advice, and it is not a recommendation to buy or not buy any product. Nazim Lokhandwala is a licensed insurance professional who offers fixed and indexed annuity products. He does not offer variable annuities or registered index-linked annuities. This guide covers every type so you can compare, and an annuity is not the right choice for everyone. Annuity guarantees depend on the claims-paying ability of the issuing insurer. Product features, rates, and rules vary by company and by state, so read your contract and ask the seller to explain anything that is unclear.