TahiPanasDua wrote:It is always assumed that an annuity is one of the safest possible investments you can make. That may be true. However, is there any protection if your, say, insurance company providing the annuity goes bust? 2
My amateur understanding is that there is great protection for such insurers and that people just don't lose on simple annuities. (In the UK: I gather it's riskier in the US.) But if you were to buy a "fancy" With Profits annuity then you can be disappointed by the results, as happened to W/P annuitants at Equitable Life.
I have a cousin with a W/P annuity: it can sink in payment from one year to the next but there is a guaranteed "collar" below which it won't sink. I believe (and so does he, and his advisor) that it's safe as houses. I assume that the poor sods at Equitable Life had no such guarantee.
I'm open to correction though.