by John Darer CLU ChFC MSSC CeFT RSP CLTC
A structured settlement annuity is not insured by the FDIC
Structured settlement annuities are not insured by the FDIC. The FDIC or Federal Deposit Insurance Corporation covers deposits in banks, not insurance products such as annuities. The FDIC is an agency of the US government that works to protect banks and their depositors. It pays back the depositor up to a specified amount (limit is currently $250,000) if the insured bank goes belly up and can't give back the depositor's money.
Insurers that Own Banks may have Banking Products Insured by the FDIC
Note that some insurance companies May own banks and may issue banking products that ARE insured by the FDIC. Furthermore some banks own insurance agencies that sell insurance products such as annuities and life insurance that are not FDIC insured (check the small print!)
The entity that "insures" or guarantees the payment of a structured annuity (or any kind of annuity for that matter) is often the life insurance company that issues the annuity. In some cases there is a guarantee from an upstream holding company.
List of Structured Settlement Annuity Companies, including qualified assignment companies and guarantors, if applicable.
A complex legal reserve system protects policy owners and annuitants and insolvencies are rare. Regulatory prohibition do not permit me, or any other licensed insurance agent or broker to discuss the nature of protections in what might be construed as sales material.
That being said, pay attention to what happened with Executive Life Insurance Company of New York. Insurers generally invest in conservative investment options. ELNY was an instance (unlikely to happen again) where this was not the case.
Helpful resource The Insolvency Process (nolhga.com)
Last updated July 18, 2023
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