Four Pillars of Safety
Pillar of Safety #1: Strength of the Insurance CompanyThe number one consideration in purchasing an Annuity is the strength of the insurance company that stands behind it. Issues such as the size of the company, the length of time they have been in business and how conservative their investments have been are all important considerations. There are a number of independent rating agencies that rate the financial strength of insurance companies. The most well known is A.M. Best. They rate insurers much like a teacher would grade students, from an A++ down to an F. Make sure that any Annuity that you are considering is from a company with an "A" rating or higher from A.M. Best. A.M. Best can be found on the internet at www.ambest.com and by phone at 908-439-2200. Pillar of Safety #2: Strength of the Parent CompanyIn this age of corporate consolidation, many companies in multiple industries are owned by parent companies that often are very large and diversified corporations. The insurance industry is no different, and the presence of a large, stable parent company is another reason for peace of mind with a Fixed Index Annuity. Pillar of Safety #3: Strength of the Legal Reserve SystemThe insurance industry is required by the Legal Reserve system to keep one dollar in reserve for every one dollar on deposit. Those reserve requirements give the insurance industry a very high degree of stability and gives safety-first retirees a very high level of peace of mind. Because of the massive reserves of insurance companies, best selling author Gordon K. Williamson points out that "during the Great Depression, it was not the U.S. Government that bailed out the banking industry - it was U.S. insurance companies. If there were ever a financial collapse in the United States, the insurance industry would be the second to the last entity to fold (second only to the government). This 'second billing' is because the government has taxing power and, of course, the ability to print money". Pillar of Safety #4: Contract GuaranteesIn a Fixed Index Annuity product, a promise is put into writing by the insurance company that you are protected against loss as long as you abide by the terms of the contract. Your principal is protected from day one, and your credited interest locks in every year. You are giving up some of your upside potential in order to protect yourself against downside risk. Remember, there is no such thing as a free lunch. Notice: Learn more about our team and why you may want to consider contacting us. We are a Maryland-based business for local residents but we can also direct you to the appropriate agent in your area regarding the same strategies that we offer to improve your safe money management plan. Your future and your family will thank you for it! |
Randall Roberts |
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