How to Compare Annuity Carriers

We're going to see that comparing carriers when shopping annuities may be putting the cart before the horse.

We'll explain below but all we want from a carrier is this...

Pay what you contractually promised to do!

That's it. To this end, we need to get to the heart of how to compare options.

We'll touch on the Carrier Litmus Test to make sure we stack the odds in our favor and we'll explain why carrier strength is important to you getting the possible payout...especially with Indexed Annuities.

First, our credentials here:

This is what we'll cover:

• Basics for comparing Annuity carriers
• Annuity strength and Indexed Annuity Secret
• The State Funds for carriers
• What's the ideal rating for Annuity carriers
• How to quote Annuity carriers according to ranking

Let's get started!

Basics for comparing Annuity carriers

First, understand that Annuities are commodities. This is so important when shopping the market.

We dive into this with our Annuity Golden Rule article but essentially, it means that in a given market (MYGA versus Indexed for example), the core offering is pretty standardized.

MYGAs are especially homogenous or similar. Basically, we're comparing the interest paid versus the carrier rating.

Interestingly, the top plans by interest rate change weekly and almost daily.

You can run your instant MYGA quote here to see who's currently best among 100's of plans:

When you run your quote, you'll see the AM Best rating (from A++ (Superior) to D- (Poor)) which reflects the carrier's financial strength.

We also like to look at how old the company is and how long it's been continuously in business. The founding date is also shown through the quote.

This also applies for Indexed Annuities, but quoting the options there is a little more involved since there are so many different facets.

You can request a comprehensive quote based on your needs here:

The quotes will reflect the carrier rankings, and in fact, we sort with carrier strength as part of the final plan selection.

This brings up a big question...

What is a minimum ranking we should look at for Annuity carriers?

We really like to focus on companies with A (including A-) ratings or better. Here's why:

For a given annuity need (accumulation, income, etc.), there will be high-rated carriers generally in the top 3!

Meaning...in the rare situation where the top rate (say for a MYGA) is rated B or lower, the difference is not generally enough to justify going down the scale.

In our books anyway. Look, we have people who say "I want the highest rate...don't care about the carrier rating."

Sure, we'll help them out, but we prefer the A rating.

This is especially true with Indexed annuities for a reason most people don't know about!

Annuity strength and Indexed Annuity Secret

MYGA annuities are easy. Can the carrier pay a given interest rate for a given period of time?

Probably pretty easy to manage that risk, especially with how insurance companies structure debt purchases and payments.

It just reflects underlying 10-year treasuries and interest rates at the time you purchase the policy.

Indexed Annuities are more complicated.

Sure, the call options for exposure to a particular index (S&P, etc.) are paid with the same interest from MYGAs, but longer term, more is in flux.

More importantly, the carriers are allowed more "leeway" over the course of the duration for your annuity.

You may purchase a given indexed annuity based on certain payouts, participation rates, caps, spreads, and the like but...

These can ALL change at regular intervals (usually annually) at the discretion of the carrier!

Yes...read that back over.

They have full right to adjust these different tools to modify your actual payout after the purchase, and it all goes back to our first section and the Golden Rule of Annuities.

Indexed Annuities are not locked in like MYGAs. Things can shift, and that's why we need to choose plans with strong ratings (A- or better!).

This is especially true if we're looking at lifetime income riders!

Most people don't realize this about Indexed annuities. Now you do!

The State Funds for carriers

Annuities (outside of variable annuities) are insurance products. They are regulated at the State level.

If a carrier fails (very, very rare), the State Guarantee Funds are required to backstop this scenario up to $300K (California...each State is different) per person.

You may have noticed that the protection is "per person", so you can't just buy multiple policies at $300K and be fine.

Again, the more you're purchasing, the stronger the carrier we want. A rated!

What's the ideal rating for Annuity carriers

It's a function of product type and duration.

So...ideal AM Best ratings:

• MYGAs: A- or higher, with possible B ratings for shorter durations (3-5 years) if the interest rate is much higher
• Indexed Annuities: A- or higher, regardless of duration so the rate rug doesn't get pulled on you!

We really like AM Best because they rank almost all annuity carriers!

How to quote Annuity carriers according to ranking

We make MYGA rates and options instantly available here:

Super easy to compare the options with carrier strengths right there, and you can even sort by a given carrier ranking (A or higher is our recommendation).

For Indexed or more complicated annuities, request a quote here:

We're happy to help with any questions as that's what we do all day long! No sales push or nonsense.

Refreshing, isn't it!

To compare MYGAs and Indexed Annuities, learn more here:

We just answer questions all day and if we're helpful, hope you work with us since there's no cost for our assistance.

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Email:  help@calhealth.net
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