Guaranteed Annuity Contracts and "Insured"

[jkharvey]

A client is concerned that the total of the plan assets (all in Guaranteed Annuity Contracts) exceeds the 100K insured maximum. Is this a genuine concern for a qualified plan?

[401king]

A client is concerned that the total of the plan assets (all in Guaranteed Annuity Contracts) exceeds the 100K insured maximum. Is this a genuine concern for a qualified plan?

The insurance company may be able to quell any concerns.

[Guest rex]

He/she needs to understand what the 100k limit means.

Each state has a guaranty association which insurance companys agree to cooperate with in order to do business within the state. If one company goes under, then other members are obligated to try and pick up the guarantees of the contract at least up to the limits. For many states, the limit on annuities is 100k. Values above this arent protected per say.

Insurance guarantees are just a promise by the insurance company to pay if they can. If they go under, the guaranty isnt so valuable. The government doesnt have any obligation to step in and pick up the tab. Fortunately do to how they are regulated and what they must invest in, if you pick a strong company, one would assume the risk of losing all your money would be low.

Nobody can predict the future, especially long term.