Annuity Life Insurance Companies

Choose the Right Annuity Insurance Company

(For the right annuity)

Annuity life insurance company

Thinking about buying an annuity? Well, annuities are a complicated mix of insurance and investments. And there are lots of choices with 773 life insurance companies in the US and thousands of products.

How do you know what company to buy from? Does it even matter? It may seem a little overwhelming, but there are a few things to look at that will help make your decisions a little easier.

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Types of Annuities

Annuities are either variable or fixed. Variable annuities have a selection of investments called subaccount funds. Subaccount funds are similar to mutual funds. Investors can choose from stocks, bonds, and other asset classes. The subaccounts accumulate money on a tax-deferred basis. Money can be transferred between subaccounts without any tax consequences.

The value of variable annuities is represented by units. The value of each unit rises and falls with the investment it represents. The account value of a variable annuity rises and falls based on the value of the units, not because there are more units or fewer units.

On the other hand, the value of fixed annuities is measured by dollars. When the value of a fixed annuity rises or falls, it's because there are more dollars or fewer dollars in the account. Fixed annuities guarantee principal. Once interest is paid, it is credited to the annuity account value and cannot be taken away or lost.

Life Insurance Companies 101

Annuities are insurance products, and may only be sold by licensed life insurance companies. Life insurance companies are either owned by the policyholders (mutual companies), or by stockholders (stock companies).

Life insurance companies have to be licensed by each state that they do business in. Each state requires the insurance company to maintain reserves and meet financial standards sufficient to meet obligations to policy holders.

Each insurance department approves annuities for sale in their state according to their regulations. Variable annuities are also regulated by the United States Securities And Exchange Commission, as well as each state insurance department.

What Does the Insurance Company Do with the Money?

When you contribute to a fixed annuity, the life insurance company puts the money into its general account. The general account is largely a portfolio of corporate and government bonds. The interest the insurance company pays to you is based on what they earn from the portfolio. The general account of an insurance company is subject to the claims of creditors. That mean if the insurance company goes bankrupt, your money can go with it.

When you contribute to a variable annuity, you choose from a selection of subaccount funds that are similar to mutual funds, and how much money is invested in each one. The subaccount funds are part of a separate account. The separate account is not subject to the claims of creditors if the insurance company goes bankrupt. So while the value of your retirement money in a variable annuity rises and falls with your investment selections, it is protected from a failure of the insurance company.

What's the Difference between Annuity Companies?

Life insurance companies tend to specialize in products. They often make decisions to be more competitive in certain areas and not in others. Some companies only sell fixed annuities.

Life insurance companies also differ in who sells their product. Some companies, called career companies, have agents that only sell their products. Other companies sell their products through banks and other financial institutions. They may also sell through independent insurance agents.

How Do I Know I’m Buying from a Quality Company?

One good thing to know is if other people are buying from this company. Are they a leader? While it doesn’t tell you about the company, it’s a good indication that financial professionals have some confidence in them. 

It’s true that Mom says, “If your friend jumped off a bridge, would you do it too?” While that’s good advice, it doesn’t apply here.

How does the company treat its customers? One way to find out is by J.D. Power's consumer satisfaction survey of annuity companies. They use a rating system of Among The Best, Better than Most, Average, and The Rest.

Annuities are long-term investments. You are going to want to know that the insurance company will be around as long as you are. Financial rating agencies, A.M. Best, Moody’s, S&P, Fitch, and others analyze life insurance companies. They publish financial strength ratings which is their opinion of the company’s ability to meet policyholder obligations. 

While the rating agencies use different systems of measure, all of them break down into the categories of high, medium, and low ability to meet policy holder obligations.

Highest Ability To Meet ObligationsMedium Ability To Meet ObligationsLowest Ability To Meet Obligations
A.M. BestA++ To A-B++ To B-C++ To C-
Moody’sAaa To AaA To BaaBa To Caa
FitchAAA To AA-A+ To BBB-BB+ To CC

The Top 20 Fixed Annuity Companies

We’ve put together a handy chart to show you the sales ranking, financial strength ratings, and J.D. Power satisfaction ratings (where available) of the top 20 fixed annuity life insurance companies by sales.

Claims Paying Ability Tier**

Rank By Premium Sales *CompanyA.M. BestS&PMoody's FitchJ.D. Power Satisfaction**
2N.Y. LifeHIghestHighestHighestHighestAmong The Best
3Global Atlantic FinancialHighestHighestMediumMediumNot Rated
4AllianzHighestHighestMediumN/AThe Rest
5Pacific LifeHighestHighestMediumHighestAverage
6 Athene Annuity & LifeHighestHighestN/AMediumThe Rest
7Lincoln FinancialHighestHighestMedium MediumAverage
8NationwideHighestHighestMediumN/ANot Rated
9American Equity InvestmentHighestHighestN/AN/ABetter Than Most
10Great AmericanHighestHighestMediumN/AAbout Average
11MassMutualHighestHighestHighestHighestNot Rated
12Fidelity & GuarantyHighestMediumMediumMediumNot Rated
13SymetraHighestHighestMediumMediumNot Rated
15Security BenefitHighestHighestN/AMediumNot Rated
15Western SouthernHighestHighestHighestHighestNot Rated
16Jackson NationalHighestHighestMediumHighestAverage
17Principal FinancialHighestHighestMediumHighestNot Rated
18Midland NationalHighestHighestN/AMediumNot Rated
19Delaware LifeHighestN/AN/AN/ANot Rated
20American NationalHighestHighestN/AN/ANot Rated

* Source: LIMRA Secure Retirement Institute U.S. Individual Annuities Sales Survey 2nd Quarter 2019

** Source: JD Power 2019 U.S. Life Insurance Study

*** Ratings obtained from company websites as of 3-3-2020.

The Top Variable Annuity Companies

Out of the 773 life insurance and annuity companies in the US, 20 sell 95% of the variable annuities. That makes it a little easier to decide who to buy from.

Here's a chart to show you the sales ranking, financial strength ratings, and J.D. Power satisfaction ratings (where available) of the top 20 variable annuity life insurance companies.

Claims-Paying Ability Tier

Rank By Premium Sales *CompanyA.M. BestS&PMoody's FitchJ.D. Power Satisfaction**
1Jackson NationalHighestHighestMediumHighestAverage
2AXA USHighestHighestHighestHighestBetter Than Most
3TIAAHighestHighestHighestHighestBetter than Most
4Lincoln FinancialHighestHighestMedium MediumAverage
5Prudential AnnuitiesHighestHighestHighestHighestAverage
7Brighthouse FinancialHighestHighestMediumMediumThe Rest
8NationwideHighestHighestMediumN/ANot Rated
9RiversourceHighestHighestHighestN/AAmong The Best
10TransamericaHighestHighestHighestHighestThe Rest
11AllianzHighestHighestMediumN/AThe Rest
12Pacific LifeHighestHighestMediumHighestAverage
13N.Y. LifeHIghestHighestHighestHighestAmong The Best
14Thrivent FinancialHighestN/AN/AHighestNot Rated
15Fidelity Investments LifeHighestN/AN/AN/ANot Rated
16Northwestern MutualHighestHighestHighestHighestNot Rated
17CMFG LifeHighestHighestMediumN/ANot Rated
18Principal FinancialHighestHighestMediumHighestNot Rated
19Great-west FinancialHighestHighestHighestHighestNot Rated
20MassMutualHighestHighestHighestHighestNot Rated

* Source: LIMRA Secure Retirement Institute U.S. Individual Annuities Sales Survey 2nd Quarter 2019

** Source: JD Power 2019 U.S. Life Insurance Study

What Next?

Annuities can be an important part of your retirement plan. While they have many features and benefits, they are not for everyone. Independent insurance agents are annuity professionals, and their job is to simplify the process. Every day they help folks just like you make smart decisions.

Talk to an independent insurance agent. They can help you decide if an annuity is right for you

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Winkintel 3rd quarter 2019 annuity sales

Insured Retirement Institute 2-019 annuity sales

Statista number of life insurance companies in U.S.

LIMRA 2019 2nd quarter annuity sales report

J.D. power annuity company satisfaction survey