One of the most important aspects of buying an annuity is the financial strength of the company behind it. You are making a long-term commitment, potentially for a decade or more. The carrier needs to be financially healthy to honor that commitment.
Why Carrier Ratings Matter
Unlike bank CDs, annuities are not FDIC insured. Your protection comes from the insurance company itself, plus state guaranty associations as a backstop. This makes financial strength ratings a crucial first filter before purchasing any annuity.
AM Best: The Gold Standard
AM Best is the most widely used rating agency specifically for insurance companies. Their ratings range from A++ (Superior) to D (Poor). Marc recommends only considering carriers rated A- or better — this filters out the vast majority of financially questionable companies.
| AM Best Rating | Meaning | Marc Recommends? |
|---|---|---|
| A++ / A+ | Superior financial strength | Yes — top tier |
| A / A- | Excellent financial strength | Yes — solid choice |
| B++ / B+ | Good financial strength | Proceed carefully |
| B or below | Fair to poor strength | Avoid for annuities |
Other Rating Agencies
AM Best is primary, but cross-referencing with Moody's, S&P, and Fitch adds confidence. Consistent strong ratings across multiple agencies is a very positive signal. Significant divergence between agencies is a reason to dig deeper.
State Guaranty Associations: Your Safety Net
Every state has an insurance guaranty association that protects policyholders if a carrier becomes insolvent. Most East Coast states provide between $250,000 and $500,000 in annuity protection. For larger deposits, spreading across two or more highly-rated carriers maximizes your coverage.
How to Look Up a Carrier Rating
AM Best ratings are publicly searchable at ambest.com. Look up any carrier by name before committing. Pay attention to rating outlooks — a stable outlook at A- is preferable to a negative outlook at A. Declining ratings are a meaningful early warning sign.
Marc's rule: Never chase the highest MYGA rate from a B-rated carrier. A slightly lower rate from an A-rated carrier is almost always the smarter long-term choice when you are protecting retirement savings.
Want Marc to Vet Carriers on Your Behalf?
Marc only works with A-rated carriers and will walk you through the financial strength of every option he recommends. Your free consultation always includes a frank discussion of carrier quality.
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