Art G
Thinks s/he gets paid by the post
- Joined
- Nov 5, 2007
- Messages
- 1,052
State insurance pools are just pools. To my knowledge there isn't any state the "guarantees" the policies beyond the pool. The FDIC is "full faith and credit" for the US so they'll print money as needed to guarantee insured deposits. States don't have that luxury and their insurance is limited. I can't see a state having a budget crisis to back annuities. This is especially true since if insurance companies are failing in large numbers they are already in a budget crisis.
The other thing I don't think is covered is all the "extras" on the fancy VAs. I believe the "no loss guarantee" is just between the policy holder and the company. The funds within the VA are held just like at any brokerage house so a failed insurance company wouldn't lose the funds. The equity value may be higher or lower but that's all. I don't think all the other features are guaranteed. I'm sure if they are someone will pop in.
This is a good post to discuss. First off, while FDIC exists and supposedly insures your money, I still haven't found a definitive as to how much time they have to repay the losses. Brokerages have SIPC which as far as I can tell is a hair safer than FNM.
As to the VA's, supposedly there are State pools in place, although, they are not to be discussed or used as assurances. While your portfolio is a separate acct. from the insurance company and still yours even if the insurer goes under, as far as I've been able to gather, the guaranteed features are left up to the disgression of whoever takes over the policy, so, the "guarantees" really are a misnomer.
As I've stated around here numerous times, it's very important to select a strong insurance company (whatever that means?), and to spread around your money over more than one product and/or company.
IF the guarantees hold up, then in my opinion, there is nothing I could have offered greater than this product, at least in this market environment. For about 2%, I just prevented about a 35% loss. When you consider it, this is a much larger insurance protector than what you'd have on any car over two years old.
To zathras, this just doesn't strike me as the best way to start off a point....
I think that is a large part of your problem Art