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Associations. State laws specify the lines of insurance covered
1
by these funds, and the dollar limits payable. Coverage is usually
for individual policyholders and their beneficiaries, not for values

held in unallocated group contracts.

Most states also restrict insurance agents and companies from
advertising the funds’ availability. If an insurer fails, regulators

usually try to get another company to take over its policies and
annuities. If that doesn’t work, the guarantee associations may be

called on to compensate consumers up to limits specified by state
laws. States require insurers to be members of these associations.

Financial contributions are determined by market share.

Summary

► The guarantees offered by variable annuities are only as
good as the company that issues them.

► It’s important to learn about the financial strength and

security of the company you are considering placing your
money with.

► Variable-annuity-owners’ fund holdings are segregated
from the insurer’s assets. If the insurance company fails, the

owners receive the money that is in their own fund accounts.

► Most states provide at least $100,000 in coverage per
customer for guaranteed portions of annuity contracts.

Chapter 4: Annuities

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