If you’re looking for annuity ratings, you’re either looking for a safe insurance company with a high financial rating, attempting to find safe annuities that fit your conservative investment style or looking for a highly rated variable annuity that has the most investment return. If you’re objective to find annuity ratings is the second, finding a safe investment, then the two choices in annuities that fit your search are fixed annuities and indexed annuities.

Fixed annuities offer an interest rate that applies against the balance in the annuity, very similar to a bank product, such as a CD. You invest your money into the contract for a minimum number of years and the funds grow tax deferred. Unlike a CD, most of these types of annuities don’t roll into a new contract when the time elapses but simply continue

 

 

 

to gain interest. Also unlike a CD, the funds grow on a tax-deferred basis.

Indexed annuities offer the contract owner the potential for participating in the growth of a particular index, such as the S & P 500, with none of the risk. The contract holder receives a percentage of the growth of the index if there is growth. If the index return goes south, the annuity owner receives a minimum guaranteed return. They don’t lose money. In exchange for this they receive a slightly lower return than fixed annuity holders receive and less than 100 percent growth in the market they index.

You base variable annuity ratings on several factors. One of them is the underlying funds the annuities contain. These funds determine the growth of the variable annuity and if they don’t perform well, the annuity’s growth is less than other products on the market.

A second way to create annuity ratings on variable products is to look at the underlying fee structure of the annuity. If the variable has a high fee structure, the final return is lower. However, since most insurance companies calculate the return after fees, it makes the cost quite transparent.

A third way to look at variable annuity ratings is the benefit of the guarantees of the product. Not all living and death benefit guarantees are equal. Some products offer a minimum guaranteed return but only if you follow specific rules. The return may be simply a guarantee you won’t lose money in the annuity or a fixed rate of return. If you purchase a product because of the living or death benefits, make certain you understand how each company’s benefit operates.

Finally, you can look at annuity ratings to examine the underlying financial stability of the insurance company that carries the annuity. If you have a variable annuity, it isn’t as important since the mutual fund company actually holds your money. In a fixed annuity, the annuity ratings are important since the money is in the general fund of the insurance company. You’ll find company ratings by looking at the insurance company’s Best rating. A.M. Best rates the insurer’s financial strength, credit, debt ratio and security. Beside’s Best, Standard & Poor’s, Wiess Research, Duff & Phelps and Moody Investor Services also look at the financial stability of insurance companies, which can answer your concerns on annuity ratings.