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How Do I Know if an Annuity Carrier is Safe?

Stan The Annuity Man

Question: How do I know that the annuity company or insurance carrier is safe and can back up the policy guarantees?  Ernest from Wisconsin

Answer: Timely question Ernest, and very important when deciding to allocate funds to an annuity strategy.  Annuity guarantees are only as good as the insurance company standing behind the policy.  Even though annuities and life insurance are backed at the state level, your decision should primarily be based on the issuing company.

As a point of interest, you can go the state guarantee fund site at to see the potential coverage levels your state provides per policy per owner.  As a very important side note, agents and advisors are not allowed to use the state guarantee fund as part of the selling process.  This is a common occurrence, but not legal or approved from a recommendation standpoint.

I use the COMDEX ranking/scoring system as my primary method for verifying the safety of insurance and annuity carriers.  COMDEX is a compilation of all annuity ratings services (A.M. Best, Standard & Poors, Fitch, and Moody’s).  A score of 0 to 100 is assigned based on the ranking compilation calculation, with 100 being perfect.  For example, New York Life, Guardian, TIAA-Cref have perfect scores of 100.  That means that they are the “safest” carriers based on the COMDEX system’s compilation of all 4 ratings services.

Ironically, the #1 selling fixed indexed annuity in the country last year had a COMDEX score of around 50 out of 100.  Not good.  This is surprising and unnerving at best, and I hope everything works out for the carrier and more importantly, the policy owners.  I guess you can compare this “sales anomaly” to a lower rated corporate bond paying a higher interest rate than a AAA corporate bond.  It’s all about risk at the end of the day, so buyer beware.

The COMDEX ranking/scoring system is a paid for service that I subscribe to, but offer for free on my website to anyone interested.  I don’t ask for any type of sign up information to download this vital information, and I update the COMDEX PDF monthly so that people can use it as an ongoing free resource.  I encourage you to go to and click the “Resources” tab for the COMDEX link, and then download the PDF.

Don’t let an agent or advisor use one ratings service as an example of carrier safety.  That’s a common practice especially if one service has a carrier at A-, and the other 3 services have the carrier at B.  Guess which one the agent is going to tell you about?

Demand to see COMDEX scores and always remember to own an annuity for what it will do (the contractual guarantees), not what it might do (projected returns).  If it sounds too good to be true, then it is… and make sure that you “transfer the risk” to a solid and safe insurance company.  Always do your homework before signing that annuity application.

*If you have a question for Stan The Annuity Man, please send your question to  He will answer all questions directly, and might include yours in his next Annuity123 “Ask Stan The Annuity Man” blog.

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About the Author:

Stan The Annuity Man is a nationally recognized annuity expert and annuity critic, and has been called the national consumer advocate for annuities… and a walking middle finger of annuity truth.  He is a weekly RetireMentor columnist for The Wall Street Journal’s, and is the exclusive annuity contributor for  His highly acclaimed book, The Annuity Stanifesto, is a top seller in its category, and is known as the go to resource for all things annuity.

Stan The Annuity Man has clients nationwide, and is considered one of the top independent annuity agents in the country.  You can learn more at


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1 Comment

  • Guerry Dobbins says:

    I’m in the process of converting a traditional IRA into an annuity because I turn 70 1/2 in 2018 and don’t want the hassle
    of dealing with RMDs. In the process I found information on the web being promoted by a guy named Josh Mellberg from Arizona claiming that index annuities with lifetime income riders were the best thing since sliced bread. So my wife and I had a sit down with one of his representatives and were ultimately given several proposals offered by insurance firms that either have a low COMDEX ranking or none at all. They are rated by A.M. Best as B++ and we were told by the rep that their “solvency ratio” was a better measure of their financial strength than their Best rating. I’ve never heard of a “solvency ratio” for insurance companies so I am slightly skeptical. What do you think?

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