Insurers Try To Weasel Out Of Their Annuity Guarantees

This is a perfect example of why I am very wary of annuities. They are NOT FDIC insured accounts, or federally guaranteed pensions. People get into these things for the long term, the very long term, and at pretty hefty up front cost. But the companies giving them might not even be around for the long term, might go bankrupt -- with no FDIC backing. (Did you think AIG was too big to ever go bankrupt?) Or, they might do something like this. 

Annuities sound like a great idea on their face -- until I consider this. This danger makes me see annuities like one of the biggest scams around. Hey, if your's lasts for the duration, you did fine. But if it just disappears long before its time -- that is a big loss. Imagine if Bernie Madoff had been managing your annuity!

I believe that states stand behind an annuity up to a certain amount. That is why you should never put in more money than is insured. You can have some money in many companies and have more protection. I think most annuities are insured for a minimum of $100,000.

Why is it if the customer makes a wrong decision and their investment goes bust, they are expected to suck up the lost but if an Annuity makes a wrong financial assumption on rates, they think they can buy their way out of it?  I have never trusted annuities because I don't trust interest rates and what they can do over the long haul.  It will be interesting to see if these companies can buy their way out of this one and what protection their customers have if they don't sell.