You should buy your annuity from an insurance company that is financially sound.
There are various ways you can research an insurance company’s financial strength, such as visiting the insurance company’s website or asking your annuity salesperson for more information.
You can also review a company’s financial strength rating from an independent rating agency such as A.M. Best Company, Standard and Poor’s Corporation, Moody’s Investor Service, and Fitch Ratings.
If an annuity owner is a Florida resident and the insurance company licensed to sell annuities in Florida becomes insolvent, a fixed deferred annuity will be guaranteed by the Florida Life & Health Insurance Guaranty Association (FLHIGA) for up to an aggregate amount of $250,000.
If the contract has been annuitized before liquidation of the company, then the maximum guarantee would be $300,000.
The Guaranty Association covers only policyholders and certificate holders that were valid Florida residents on the date the insurer is declared insolvent and is liquidated. If you are a Florida resident on that date, you may be covered by FLHIGA even if you have subsequently moved to another state.
In Florida, an annuity may serve several important functions:
Florida law specifically exempts annuities from collection by a judgment creditors. Section 222.14 of the Florida statutes states:
Exemption of cash surrender value of life insurance policies and annuity contracts from legal process.—The cash surrender values of life insurance policies issued upon the lives of citizens or residents of the state and the proceeds of annuity contracts issued to citizens or residents of the state, upon whatever form, shall not in any case be liable to attachment, garnishment or legal process in favor of any creditor of the person whose life is so insured or of any creditor of the person who is the beneficiary of such annuity contract, unless the insurance policy or annuity contract was effected for the benefit of such creditor.
The annuity proceeds are protected even after deposited into a bank account so long as the funds in the account can be traced to the annuity.