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Chapter 9. Insurance and Annuities > The Safety of the Insurance Industry

The Safety of the Insurance Industry

When you consider investing your money in products offered by insurance companies, you need to understand what they provide you in terms of relative safety. The answer is that your money is very safe if it rests in the hands of the insurance company in a product like a fixed annuity or the general account of a variable annuity. But you are often asking the insurance company to administer assets that you are directing into other investments, and they are subject to market risk. Those investments, primarily in variable annuities and variable life, are only as safe as the underlying investments that you have chosen.

The insurance industry itself is incredibly sound and one of the most highly regulated industries in the country. Each of the 50 states regulates insurance. In addition, the National Association of Insurance Commissioners (NAIC) acts to set uniform standards that are typically adopted and enforced by the States.


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