Suze Orman says your annuity guarantee is ‘only as good as’ the insurer’s balance sheet

Suze Orman says your annuity guarantee is ‘only as good as’ the insurer’s balance sheet — here’s why

Annuities are popular with many retirees because they offer what seems to be a guaranteed fixed income for the rest of your life. Financial advisor Suze Orman warns that they might not be as safe a bet as they seem.

“[An annuity is] subject to the claims paying ability of the issuing company,” said Orman on an episode of her podcast, Suze Orman’s Women & Money. “Meaning that if the insurer gets in trouble… your guarantee is only as good as their balance sheet.”

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Annuities are offered by insurance companies, not banks or credit unions. That means they aren’t federally protected the same way that some banking products are.

Here’s what that means for you — and what to keep in mind if you’re interested in purchasing an annuity anyway.

Bank accounts have FDIC coverage; annuities don’t

Almost all credible banks are FDIC-insured. That means the federal government backs the deposit accounts of those banks for up to $250,000 per owner, per ownership category, in case those banks fail.

For example, if you had a checking account and a savings account at the same bank, you would be covered for up to $250,000 of the total amount saved in both accounts. If you had a joint savings account with one other account owner, the FDIC would cover up to $500,000 of that account because there are two owners.

The federal government is able to do that because it actively maintains the Deposit Insurance Fund, or DIF. The DIF actively holds a certain amount of money earmarked for use in case of bank failure; as of Q2 2026, it held around $161 billion.

That’s around 1.5% of the money the FDIC would need to pay out if every federally insured bank failed at the same time. Because banks very rarely fail, the FDIC is only federally required to hold at least 1.35% of the money needed to pay out every covered deposit account.

Annuities are not a deposit product; they are an insurance product. As such, they aren’t covered by the FDIC — or by any federal insurance at all.

Instead, annuities are covered on a state-by-state basis by state guaranty associations. If the insurance company that offers your annuity fails, these organizations will pay you back a certain amount of your annuity.

Source: finance.yahoo.com