Are Annuities Regulated At The State Or Federal Level?

Question: Who regulates and oversee annuities?  Is it at the state level or at the federal level?  Bart from Santa Barbara, California

Answer: Great question Bart, but as usual with annuities, the answer is a little complex.  Annuities are regulated at the state level, and each state has a guarantee fund that backs up policies to a certain dollar amount.  To find out the specific levels for your state, go to  There’s no uniformity in coverage, and every state has different dollar protection limitations.  With that being said, your primary decision in choosing an annuity should always be the claims paying ability of the carrier, not the state guarantee fund.  It’s important for you to know that state guarantee fund coverage is not FDIC, and should never be compared to that federal program.

Each state has an insurance commissioner that oversees all annuity business within their state.  You can find out more information on your specific state at the National Association of Insurance Commissioners website at Your state insurance commissioner’s office is the place that you can check on the background of a specific agent, file a complaint, check on the legitimacy of a carrier, and educate yourself on all types of annuities.  I encourage you to become familiar with your state insurance web site from an educational standpoint.  They are there to help the consumer, so take advantage of that.

Fixed annuities, fixed indexed annuities (also incorrectly referred to and hyped as “hybrids”), single premium immediate annuities, and longevity annuities (aka: deferred income annuities) are regulated at the state level.  Variable annuities are also overseen at the state level, but draws additional oversight at the federal level because variable annuities are considered a security.

The Financial Industry Regulatory Authority (aka: FINRA) and the Securities Exchange Commission (aka: SEC) are the 2 federal governing bodies that help monitor variable annuity products and sales.  You can learn more by going to the FINRA site (click here) and to the SEC site (click here).

A few years ago, there was a huge legal fight over the question of whether an indexed annuity should be considered a security.  After a lot of time, effort, emotion, and legal expense, it was determined that indexed annuities did not qualify to be classified as a security and only should be considered a fixed annuity.  The bottom line is that indexed annuities are regulated only at the state level……for now.

In my opinion, the states are doing a poor job in regulating and enforcing how agents advertise and promote annuities.  If you Google the word “annuity”, you will find out what I am talking about.  Agents can say anything, and seem to get away with this ongoing huckster selling strategy.

It’s the wild wild west out there, so be careful and do your homework before signing that annuity application.