A fixed annuity is as safe as the insurance company that issues it. It is not FDIC insured (FDIC list of products it does not insure, last updated May 12, 2026), but every state has a guaranty association that backs annuity benefits up to a limit, most commonly $250,000 per person per insurer (NOLHGA state table, information as of June 1, 2025, checked October 15, 2026).
Are fixed annuities safe?
Mostly yes against market losses, with one risk that matters: the insurer. A fixed annuity (a multi-year guaranteed annuity, a fixed index annuity or a fixed immediate annuity) does not lose value when stocks fall, because the insurer, not you, carries the investment risk. What you are trusting is the insurer's ability to pay. The SEC says an insurer's obligations under an annuity "are subject to its financial strength and claims-paying ability" (Investor.gov, Annuities, checked October 15, 2026).
So "safe" means three separate things, and only the first is a strength of fixed annuities:
- Safe from market swings. Yes, for the guaranteed rate or the credited interest.
- Safe if the insurer fails. Only up to your state's guaranty limit (table below).
- Safe from changes of plan. Not automatically. Leaving early usually triggers a surrender charge, and some contracts apply a market value adjustment. See surrender charges.
Are fixed annuities FDIC insured?
No. The Federal Deposit Insurance Corporation lists annuities among the products it does not insure, "even if they were purchased from an insured bank" (FDIC, Financial Products That Are Not Insured by the FDIC, last updated May 12, 2026). No federal agency guarantees a fixed annuity. A bank CD, by contrast, is FDIC insured up to $250,000 per depositor, per bank, per ownership category.
A seller who calls a fixed annuity "FDIC protected," "government guaranteed" or "as safe as a CD" is describing a different backing. The comparison is laid out in annuity vs CD, and the full answer to the general question is on our are annuities safe page.
How safe are fixed annuities if the insurance company fails?
Three layers stand behind the promise. The insurer's own reserves come first. State regulators come second: they set capital requirements and limit what an insurer may invest in. The third layer is your state's life and health insurance guaranty association, which pays covered benefits, up to a limit, after a court orders a failed insurer into liquidation. Most states follow the NAIC model act at $250,000 in present value of annuity benefits (NAIC Model 520, Section 3), and the National Organization of Life and Health Insurance Guaranty Associations shows 40 of 51 jurisdictions at $250,000 and 11 higher (NOLHGA, How You're Protected, information as of June 1, 2025).
| State | Annuity limit (NOLHGA) |
|---|---|
| California | $250,000 |
| Texas | $250,000 |
| Florida | $250,000 |
| New York | $500,000 |
| Washington | $500,000 |
Checked October 15, 2026 against the NOLHGA table; confirm your own state, because laws change. Limits apply per insurer, not in total (NOLHGA FAQ, checked October 15, 2026). Two limits that surprise people: interest above a formula rate and index-linked interest not yet credited may be excluded (NOLHGA Product Coverage FAQ), and with court approval an association may delay cash withdrawals for a period (Model 520, Section 8).
How safe is a fixed annuity compared with a CD?
| Bank CD | Fixed annuity (MYGA type) | |
|---|---|---|
| Backed by | The bank, plus FDIC insurance | The insurer, plus a state guaranty association |
| Protection limit | $250,000 per depositor, per bank, per ownership category | Commonly $250,000 per person, per insurer (varies by state) |
| Leaving early | Usually a few months of interest | Often a surrender charge for the whole term, sometimes plus a market value adjustment |
| Rate, October 14, 2026 | Top 5-year CD 5.00% APY | Highest tracked public 5-year sheet 6.05% |
The rates come from our own monthly MYGA vs CD Spread Index, Edition 2, data as of October 14, 2026: the highest 5-year rate on four public insurer rate sheets sat 1.05 points above the top 5-year CD. That extra yield is the price of taking insurer credit risk and surrender terms, not a free upgrade. If you want CD alternatives that keep a government backing, see alternatives to CDs.
Can you lose money in a fixed annuity?
Yes, in four ways, none of them a market crash:
- Surrender charges and adjustments. Withdraw more than the free amount early and you can get back less than you put in.
- Insurer failure above the limit. The excess becomes a claim on the failed company's estate, which may pay only part of it.
- Inflation. A fixed rate that is lower than inflation loses buying power, even when the dollar balance rises.
- Renewal rates. After the guarantee period, or on a fixed index annuity's caps, the insurer sets the new rate. See who decides annuity cap renewals.
A plain example with numbers
Hypothetical: $600,000 to place in fixed annuities, in a state with a $250,000 annuity limit, and one insurer fails with nothing recovered from its estate (unusual, but the worst case). With all $600,000 at one insurer, $250,000 is covered and $350,000 is not. With $300,000 each at two insurers, the failed one holds $300,000, so $250,000 is covered and $50,000 is not. With $200,000 each at three insurers, every piece is under the limit and is covered in full. Splitting costs some convenience and possibly a little rate.
How to check a fixed annuity before you sign
- Ask who the insurer is and for its ratings from at least two agencies, with dates. AM Best calls its rating an opinion that is "only one factor" (AM Best rating guide).
- Look up the insurer in the NAIC Consumer Insurance Search and check complaints and the seller's license with your state insurance department.
- Ask for your state's guaranty association notice, and ask how much you already have with that insurer, including life insurance.
- Ask what would be excluded from guaranty coverage, such as index credits not yet credited.
- Use the free-look period to read the contract. Our questions to ask before buying an annuity list has the rest.
Read This Before You Sign
A one-page checklist: the red flags in annuity and indexed universal life (IUL) sales, and the questions to ask before you sign anything. A one-page list for checking an insurer's ratings, ownership and your state's guaranty limit before you buy. We’ll email it to you.
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Sources
- FDIC: Financial Products That Are Not Insured by the FDIC (last updated May 12, 2026; checked October 15, 2026)
- SEC Investor.gov: Annuities (checked October 15, 2026)
- NOLHGA: How You're Protected, coverage levels by state (information as of June 1, 2025; checked October 15, 2026)
- NOLHGA: Frequently Asked Questions (checked October 14, 2026)
- NOLHGA: Product Coverage FAQ (checked October 14, 2026)
- NAIC: Model 520, Life and Health Insurance Guaranty Association Model Act (as printed 2018), Sections 3 and 8
- AM Best: Guide to Best's Financial Strength Ratings (checked October 14, 2026)
- NAIC: Consumer Insurance Search
- Retirement Literacy Foundation: MYGA vs CD Spread Index, Edition 2 (data as of October 14, 2026)
The Retirement Literacy Foundation is a 501(c)(3) public charity. This page is general education, not tax, legal or investment advice. Nothing is sold here, no product is recommended, and RLF accepts no funding from financial companies. Rules and figures change; each one above shows its source and date. Check anything you plan to act on with your state insurance department or a qualified professional who is not paid on the product.