Income Annuities and the State Guaranty Fund

[SmartMoney]

I'm curious as to how everyone approaches questions on the benefits of Income Annuities and how these plans are covered via the State Guaranty Fund. Guaranteed withdrawal benefit plans are newer and havent really been addressed in their guidelines yet. I cant find any literature that address them specifically.

I understand the fund protects annuties that are in a payout phase (annuitized) up to their legal limits, though these new breed of income annuties are techincally not being annutized when a client takes a guaranteed withdrawal each year. Will they still apply and be covered? Or are the cash values the only part thats protected?

 

[arnguy]

Call your state DOI. It probably will vary from state to state.

 

[Crabcake Johnny]

Call up some Shenandoah clients and ask them how it's going.

 

[HarryRenard]

An annuity does not have to be annuitized to be covered, so yes it would still be covered up to 100K per person per company.

HealthAgent- Great example can you name any other companies with similar problems out of the thousands of insurance companies doing business. And are you saying that these people have lost money and that the state gauantee assoc wont cover these people?

I think something like +230 banks have gone out of business vs how many insurance co's?
Not implying fdic didnt step in but that doesnt inspire confidence now does it, so where does the health g-d think is a safe place to invest?

 

[retread]

An annuity does not have to be annuitized to be covered, so yes it would still be covered up to 100K per person per company.

Just for the record, Kansas G.A. raised its limit on annuities to $250K this year. And to the best of my knowledge, the max for multiple claims on any one life is $300K.... that would include both life and annuities. Correct me if I am wrong.

 

[HarryRenard]

Just for the record, Kansas G.A. raised its limit on annuities to $250K this year. And to the best of my knowledge, the max for multiple claims on any one life is $300K.... that would include both life and annuities. Correct me if I am wrong.

I cant speak for Ks but 300k is the limit per person per company.

There are other threads about this in the annuity section where this was debated and it was researched, I am pretty sure this is how it is, if certain states have changed/raised the limits that is something different.

But of course everyone should reaserch this for the state(s) you do business in and rely on the forum as mentioned above.

To the OP i would say that the A/V is what would be paid not the IAV, that is how I interpret it, you should contact the carrier or the DOI to find out.

LIMITS ON AMOUNTS OF COVERAGEThe statute also limits the amount that the corporation is obligated to pay. The corporation cannot pay more than
the amount the insurance company would owe under a Policy or Contract. Also, with respect to any one life,
regardless of the number of Policies or Contracts with the member insurer, the corporation will pay a maximum of
$300,000 even if the Policies or Contracts provide different types of coverage. Within this overall $300,000 limit,
the corporation will not pay more than $100,000 in cash surrender values, $300,000 in health insurance benefits,
$100,000 in present value of annuities, or $300,000 in life insurance death benefits--again, no matter how many
Policies and Contracts the insured has with the member company, and no matter how many different types of​

coverage.

 

[djs]

For anyone keeping track, I think California is 80% of the present value of the annuity, up to a maximum of $100K.

It's a reasonable backup for the very rare times it is needed, but it is not as good as the FDIC coverage in terms of raw dollars and coverage.

Yes, life policies are 80% of the death benefit, up to $250K.

If you are selling the guarantee funds, you have a problem in the first place.

Dan

 

[HarryRenard]

It's a reasonable backup for the very rare times it is needed,

If you are selling the guarantee funds, you have a problem in the first place.

Dan

Very well said, I could not agree more.

 

[scagnt83]

SC covers up to $250K for annuities..
I heard that the new financial reform bill will mandate all SGFs to cover up to $250... but its just a rumor as far as I know..

 

[padthaiforlunch]

Reinsurers would come into play as well.

Considering the underlying reserve requirements for annuities, another insurer would take the book of business unless the reserve investments went bad. Reinsurers would play a role here.

If all of the reserve investments tank, your pretty effed no matter what you do with your money.

So a lot has to go wrong before state guarantee payouts begin.... mis-managent, collapse of bond market, reinsurers not paying claims.