Annuities and Consumer Protections

Life insurance companies that issue annuities are regulated by state insurance departments to protect consumers and ensure company solvency. Each state has comprehensive laws and regulations governing, but not limited to, licensing requirements, market conduct regulation and financial condition examinations, and product approvals.

In addition to state laws and regulations, variable annuities are subject to regulation by the Securities and Exchange Commission (SEC). Variable annuities can only be sold by a registered representative of a broker-dealer that is a member of the Financial Industry Regulatory Authority (FINRA). This representative must also be licensed by the state where he or she is selling the annuity.

Most states offer a “free-look” period following an annuity purchase. During this period (typically 10 days), the purchaser has the right to review the contract and return it if he or she feels the purchase was a mistake. The company then will cancel the contract and, depending on the state, will refund the initial contribution (purchase price) or the account value. Rules vary from state to state and not all states offer a free-look option.

Publications and Resources

A Woman's Guide to Annuities. Retirement tends to be a bigger challenge for women: lower lifetime earnings equal lower retirement income. Women also live longer than men and must make income last for a longer period of time. Annuities may help women overcome retirement obstacles.

The Individual Annuity: A Resource In Your Retirement. This guide has been prepared to help retirees understand what an individual annuity contract is, what options are available, and how the right choice might enhance retirement security.

Individual Annuities: Purchasing Tips. An annuity is a long-term financial contract. You should enter into an the annuity arrangement only after a thorough review of your personal finances and retirement goals. To help you better understand what to consider before purchasing, review these tips.