Are Annuities FDIC Insured?
Jason Stolz CLTC, CRPC
Are annuities FDIC insured? The quick answer is no. Unlike bank products such as CDs, checking accounts, and savings accounts, annuities are not protected by the Federal Deposit Insurance Corporation (FDIC). Instead, they are guaranteed by the claims-paying ability of the issuing insurance company and backed by your state’s guaranty association up to certain limits. At Diversified Insurance Brokers, we make it simple to compare current annuity rates, evaluate carrier strength, and understand how annuity protections stack up against FDIC coverage so you can make safe, informed retirement decisions.
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Compare annuities from 75+ top-rated carriers and learn how state guaranty protections work.
What FDIC Insurance Actually Covers
FDIC coverage applies to bank accounts — not insurance products. It includes:
- Checking accounts
- Savings accounts
- Certificates of Deposit (CDs)
- Money market deposit accounts
These accounts are insured up to $250,000 per depositor, per bank. But annuities, mutual funds, stocks, and bonds are outside of FDIC jurisdiction. That’s why it’s critical to understand the unique protections annuities offer.
How Annuities Provide Protection
While annuities don’t carry FDIC insurance, they are safeguarded through:
- Insurance Company Strength: Each annuity is backed by the issuing carrier’s financial strength. This is why ratings from AM Best, S&P, and Moody’s are so important.
- State Guaranty Associations: Every state provides a safety net if an insurer fails. Coverage typically protects up to $250,000 of annuity value per owner, per insurer (limits vary by state).
- Diversification: For larger deposits, many clients split funds among multiple carriers to maximize protection.
See Today’s Current Annuity Rates
Get updated fixed and indexed annuity rates — including products yielding over 6% as of this month.
Why Annuities Can Be Safer Than Market Investments
Even without FDIC backing, annuities can provide security that market-based investments cannot. Consider:
- Fixed Annuities: Lock in guaranteed growth, similar to CDs but with higher rates and tax deferral.
- Fixed Indexed Annuities (FIAs): Allow growth tied to index performance with zero downside market risk.
- Income Annuities: Guarantee a lifetime paycheck, no matter how long you live.
These features make annuities a reliable cornerstone for retirement planning. Many of our clients use annuities to diversify beyond stocks and bonds while securing income for life.
Example: FDIC CD vs. Fixed Annuity
A $250,000 deposit in a 5-year FDIC CD at 4.0% grows to about $304,000. The same deposit in a 5-year fixed annuity at 6.0% grows to $335,000 — with tax deferral. While CDs rely on FDIC insurance, annuities rely on contractual guarantees plus state-level protection.
Lifetime Income Calculator
Best Practices to Maximize Safety
- Work with carriers rated “A” or higher.
- Stay within your state guaranty limits.
- Use multiple carriers if depositing more than $250,000 with one insurer.
- Coordinate annuities with Social Security planning for reliable retirement income.
Why Work With Diversified Insurance Brokers?
Since 1980, we’ve guided clients nationwide in building safe retirement income plans. We’re independent fiduciaries, meaning we represent your interests — not the insurance companies. Whether you’re looking at bonus annuities, annuities as a life insurance alternative, or lifetime income strategies, our team will show you the smartest ways to protect and grow your wealth.
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Schedule your free consultation and learn how annuities compare to FDIC-insured options.
FAQs: Are Annuities FDIC Insured?
Are annuities FDIC insured?
No. FDIC only protects bank deposits such as checking, savings, and CDs. Annuities are guaranteed by the issuing insurance company and backed by state guaranty associations within certain limits.
How do state guaranty associations protect annuities?
If an insurance company fails, your state’s guaranty association steps in to provide limited coverage. In most states, this protection is up to $250,000 per person, per insurer, but limits vary.
Which is safer, a CD or an annuity?
CDs are backed by FDIC insurance, but they usually pay lower rates. Annuities can provide higher yields, tax deferral, and state guaranty protections, making them strong retirement income tools.
Can annuities lose money in a market downturn?
Fixed annuities guarantee principal and interest. Fixed indexed annuities also protect against loss while allowing growth tied to a market index. Only variable annuities carry market risk.
What if my annuity company fails?
Your state guaranty association provides a backstop, though within limits. Working with highly rated carriers further minimizes this risk and helps ensure your income is secure.
