Who Regulates Traditional Life Insurance And Fixed Annuities?

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So, who regulates traditional life insurance and fixed annuities? Good question.

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My name is Stan The Annuity Man, America’s annuity agent, licensed in all 50 states and Puerto Rico,

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and the founder of CGO: Contractual Guarantees Only. We only look at what an annuity will do,

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not what it might do, not the hypotheticals and theoreticals and all of that nonsense.

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So, let’s get to that question of who oversees and who regulates,

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and who’s doing a pretty darn good job during this chaos after this.

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So, traditional life insurance and fixed annuities are regulated at the state level.

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So, every state has an insurance commissioner, Department of Financial whatever, blah, blah, blah.

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But overseeing all of that is the NAIC, National Association of Insurance Commissioners,

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which all of the state insurance commissioners are part of.

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There’s an overseeing body as well to make sure that the companies are solid financially,

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that they are following those regulations on what they can and cannot invest in.

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I always tell people life insurance companies, annuity companies, well,

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life insurance companies issue annuities. So, in essence, life and annuity companies, they’re not

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smarter than banks. They’re just more regulated. They’re more handcuffed to not do stupid things.

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Now, have there been charlatans and sociopaths enter the building in the annuity industry and lie?

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Yeah, but they’re in prison. The last one was about five years ago, and a really, really smart

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person we thought was running the show. Long story short, without getting into the details,

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every single person got every single penny back, but the person that was running the show,

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because he was not truthful with the NAIC and the state insurance commissioner,

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they are currently in prison. So, it is a well-regulated industry.

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But let me throw a little bit of a nuance to that. Having done this for a long time, three decades,

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what I have seen is the annuity industry itself, the big carriers themselves, self-police.

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Annuities, and there’s many different types. They are nothing more than confidence products.

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The fixed annuity space for sure, for lifetime income, QLACs, DIAs, and SPIAs, Income Riders, then

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you have principal protection products like index annuities and MYGAs. They’re confidence products.

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So, the industry knows that the public cannot lose confidence in those products.

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So, there’s a lot of behind-the-scenes self-regulation going on that

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I’m aware of that I can’t talk about, but I am aware of. Okay?

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Now, backing up life insurance policies and annuities are what’s called the state

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guarantee fund. It is not FDIC. The state guarantees it.

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But we’ve seen a very, very good track record with state guarantee funds.

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Okay? I’ve been doing this a long time. I’ve seen three companies be absorbed by the state

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because they should have absorbed them, and every single time, everyone got their money back.

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And that’s people that had money above and beyond the state guarantee fund limit.

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I’m not saying go crazy, but I am saying that

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the annuity industry doesn’t want to gore the golden goose of confidence.

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Alright? So, the NAIC does a great job, in my opinion. You can go to, I think it’s NAIC.com or

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NAIC.org. I’m not sure. Just type in NAIC and you can see what they do, and they have their meetings

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and all this stuff. But in essence, everybody at the state level is working together and doing

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kind of the same thing to protect the consumer. That’s what this is all about. It’s all about you.

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And these are confidence products. And as 14,000 to 15,000 people are turning 65 every

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single day looking for guarantees, looking for pension-type products,

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these insurance commissioners and the NAIC, they’re working with and for.

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They have a lot of responsibility. They don’t take that lightly. They really don’t.

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And I think that the two instances in my recent past, one in 2008, one in 2021, I think it was,

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they learned from those things. The insurance commissioners learned from what happened and,

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you know, the consumers were taken care of. It was great. But they learn and they get better.

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I think one of the big things they have to do is they have to look at everybody.

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When an annuity company wants to sell an annuity in different states,

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they have to go to each state for approval. That’s the reason when you go to my site

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and you run quotes or receive the live MYGA feed, some carriers aren’t in those states.

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They either haven’t been approved or those carriers didn’t apply to be sold in those states.

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Some states are very strenuous on what they do and what they require to get approved in

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those states. New York’s one of them. I’m not saying good or bad, just they’re very,

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very tough to get anything through. For instance, a lot of the income riders aren’t approved in

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New York. I don’t know why. I think they’re a pro-consumer product, but they just are not.

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And you can’t play games anymore. Back in the early days, some agents, I never did this.

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I don’t know why I’d ever do that. It just didn’t feel right.

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They’d have people from New York fly to Florida, sign the paperwork at the Florida airport,

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and then fly back to New York. Back then, it was good, but they’ve closed that loophole.

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The NAIC is looking. They’re doing the best they can. I’m sure they’re understaffed and underpaid,

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but from all I’ve seen in my time out here, and I’m the number one independent fixed annuity

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agent in the country, I have nothing but good things to say. They’re doing a heck of a job.

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And I also want to give some props to the four rating services that we use: A.M. Best,

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Standard & Poor’s, Moody’s, and Fitch. We do not use Weiss. If you want to call me and ask me why,

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I’ll tell you. I know them, but we just don’t use them.

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A.M. Best, Standard & Poor’s, Moody’s, and Fitch, we use those rating services.

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And we also, you know, shout out to a couple of my friends who are retired Wall Streeters that,

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for whatever reason, enjoy looking at the financials of these companies.

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And we do that. We look at that and look at the risk mitigation of all of that.

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But, you know, that’s who oversees life insurance and annuities.

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Now, life insurance companies issue annuities, fixed annuities. I do not

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sell life insurance or traditional long-term care, even though there are

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some annuities for long-term care. I specialize in the annuity space.

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I do have the two top people in life insurance and long-term care as personal friends,

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so if you want to see that, you get to talk to them because I just think being

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a specialist makes sense. I just live this space. I know it backwards and forwards.

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But in combination with the NAIC, in combination with the state insurance

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commissioners, and then me being out here for so long

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and doing this for so long, and I really do understand it, you’re in good hands.

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We hope that you use us or think about using us. If you want to become a client, go to my site,

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theannuityman.com, run quotes 24/7/365, download my six owner’s manuals for free. I’ve done

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thousands of videos. I have a Fun with Annuities podcast that comes out every two weeks as well.

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I’m flooding the zone with content and with facts, not sales pitches.

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You’ll never hear a carrier’s name here. You’ll never hear about a specific product.

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You’re going to hear about the general nature of annuities so you can make a good,

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informed decision on your terms and on your time frame.

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Do me one last favor. The spinning clock above my head, just right above me,

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is a video that I did on lifetime income and how artificial intelligence is

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going to affect the life insurance and annuity industry. And it will.

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And I know for a fact that the NAIC is really watching this and keeping a close eye.

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I feel good about that. They are proactively addressing this and looking at it.

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But my prediction is going to come true.

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If you want to watch that video, it’d be a good foundation for you to have.

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So, with that being said, I’ll see you next time. My name is Stan The Annuity Man.