Generally VAs are separate account products, which means the assets in the policy are segregated from the insurer's assets in the event of an insolvency. Where the rub comes in is that most people buy these things for the guarantee, and that is an obligation subject to the solvency of the insurer. If the insurer goes down, you are at risk to the extent of your guarantee's value.
Don't you mean your risk is the amount your annuity's value EXCEEDS the state's guarantee limit? IOW- If I buy SA for $500k, the insurance co defaults, and my state's guarantee limit is $100k, I'm (potentially) out $400k. Or am I mistaken?
Also- Even where the VA includes separate 'investment' account, the annuity buyer could still loose $$ if the market (assuming stock investments) drops significantly & the insurer defaults, right?
Example- I buy VA linked to market equities for $500k. One yr later the market has dropped 25% & the insurer goes bust. My state guarantee fund limit is (say) $100k. Despite the insurer's "guaranteed minimum accumulation benefit" and the separate "investment" account, wouldn't I still have lost $$$?
http://www.ftadviser.com/2012/01/12...e-annuity-8mQ0z4mwkkG4on5DMLnQvM/article.html
http://www.smartmoney.com/retirement/planning/whats-wrong-with-variable-annuities-9512/
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