No, are annuities insured by FDIC? No—FDIC insurance insures bank deposits, not annuity contracts issued by insurance companies.
If you’re shopping for an annuity, that one detail changes how you judge risk. People see an annuity sold through a bank and assume the FDIC safety net follows. It doesn’t. Annuities sit in the insurance lane, with state rules and insurer credit strength doing the heavy lifting.
This guide shows where FDIC protection starts and stops, what can step in if an insurer fails, and checks that keep you from signing the wrong contract.
What FDIC Insurance Insures And What It Doesn’t
The FDIC insures deposit accounts at FDIC-insured banks: checking, savings, money market deposit accounts, and CDs. If a bank fails, eligible deposits can be reimbursed up to the standard limit per depositor, per insured bank, per ownership category.
Banks also sell non-deposit products. Once money becomes an investment or an insurance contract, it’s outside FDIC protection. The FDIC lists annuities among financial products it does not insure. See the FDIC page on deposit insurance scope and non-deposit products.
How FDIC limits work on deposits
FDIC protection is tied to the account title and the bank, not the app you used to open it. If you have $250,000 in your name at Bank A and $250,000 in your name at Bank B, both can be within the standard limit. If you have $400,000 in your name at one bank, the amount over the limit can be at risk in a bank failure. Joint accounts and certain trust accounts can raise protection, but only when the ownership category rules are met.
This is why a “bank-sold annuity” pitch can feel familiar: it borrows the vibe of deposit insurance. Still, an annuity purchase payment is not a deposit category. It doesn’t add to your FDIC protection, and it doesn’t borrow any of it either.
Protection Snapshot For Common Products
This table separates “bank deposit” safety from “insurance contract” safety. If a statement shows a bank name, use the product line to spot what you actually own.
| Product | FDIC Insured? | What Usually Protects It Instead |
|---|---|---|
| Checking or savings at an FDIC-insured bank | Yes, if the account is an insured deposit | FDIC deposit insurance up to the standard limit, based on ownership category |
| Certificate of deposit (CD) | Yes, if issued by an FDIC-insured bank | FDIC deposit insurance; the rate and term are separate from insurance |
| Fixed deferred annuity | No | Insurance company strength; state life and health guaranty association limits |
| Fixed indexed annuity | No | Insurance company strength; state guaranty association limits |
| Multi-year guaranteed annuity (MYGA) | No | Insurance company strength; state guaranty association limits |
| Immediate income annuity | No | Insurance company strength; state guaranty association limits |
| Variable annuity | No | Insurance guarantees plus investment subaccounts; state guaranty limits may apply to certain benefits |
| Money market mutual fund | No | Fund and market risk; brokerage failure protection is separate from market losses |
| U.S. Treasury securities | No | Backed by the U.S. government; held through a broker or TreasuryDirect |
Are Annuities Insured By FDIC? The Two Mix-Ups
The first mix-up is the place of sale. Banks and brokerages can sell annuities through licensed agents. Your cash may move from a bank account to pay the purchase payment. Still, the annuity contract is issued by an insurance company. The bank is not the insurer.
The second mix-up is the word “guarantee.” Fixed and indexed annuities can guarantee a crediting method or a payout formula. Those guarantees are promises from the insurer, not from the FDIC. If the insurer can’t meet them, FDIC insurance does not step in.
What Protects Annuity Owners Instead Of FDIC Insurance
Insurance company claims-paying ability
Annuities are backed by the insurer’s general account and its ability to pay. That’s why you’ll see rating agency grades (AM Best, S&P, Moody’s, Fitch). Ratings aren’t guarantees, but they help you compare issuers and spot weak balance-sheet signals.
State life and health guaranty associations
If a licensed insurer becomes insolvent, state guaranty associations can step in, subject to state rules and caps. Protection is commonly limited per person, per insurer. Limits vary by state and by contract type, and some contracts (like certain unallocated annuities) can be treated differently.
For a clear overview of how guaranty associations work and how limits are applied, read NOLHGA’s PDF, The Nation’s Safety Net. It explains the “per person, per company” structure and how protection may continue in some cases.
Two practical guardrails: guaranty protection is not meant to be a sales hook, and states often restrict how agents can talk about it. Treat it as a backstop, not a plan.
Fixed, Indexed, And Variable Annuities: What Changes
Fixed annuities and MYGAs
Fixed annuities trade market swings for contract terms. Your main risks are insurer credit risk and limited access during the surrender period. Rate shopping helps, but issuer quality and liquidity terms matter just as much.
Fixed indexed annuities
Indexed annuities credit interest using a formula linked to an index. It’s not a direct stock investment. The caps, spreads, and participation rates can reset, so read the pages that explain when terms can change and what happens on early withdrawals.
Variable annuities
Variable annuities add market exposure through subaccounts. Market losses can reduce account value even when the insurer stays healthy. Fees can stack up: mortality and expense charges, fund expenses, admin fees, and rider fees. Know the all-in annual cost before you compare it to other ways to invest.
Where People Get Burned
Assuming a bank logo means FDIC protection
A bank lobby is a sales channel, not a protection label. Ask for the issuer name and the contract form number. If the issuer is an insurance company, it’s not an insured deposit.
Buying more annuity than you can comfortably lock up
Surrender charges can sting. Before you buy, list money you may need for taxes, home repairs, medical bills, or family needs. Keep that cash outside long surrender schedules.
Paying for riders you won’t trigger
Riders can be worth it when they match a real plan for income. They can also drain returns when you never use them. Ask what triggers the benefit, what actions can void it, and what the rider costs each year.
How To Check An Annuity’s Safety In 15 Minutes
These steps won’t replace a full review, but they do catch most deal-breakers fast.
- Find the issuer. It’s on the application and on the contract front page.
- Confirm the product type. If it’s an annuity contract, it is outside FDIC insurance.
- Scan insurer ratings. Note grades from at least two agencies and any negative outlook.
- Read the surrender schedule. Mark the years, charge percentages, and free withdrawal amount.
- List all yearly fees. For variable annuities and riders, write down each fee line and the total.
- Total your exposure by insurer. Add up all policies with that insurer, not just the new contract.
Questions That Make A Sales Conversation Clear
When people ask “are annuities insured by FDIC?” they want a straight answer. These questions force the details into the open.
| Question | What You’re Checking | What A Solid Answer Sounds Like |
|---|---|---|
| Who is the issuing insurance company? | Who owes you the promise | “This contract is issued by X Insurance Company, licensed in your state.” |
| Is any part of my purchase payment held as an insured deposit? | Deposit vs contract | “No, it becomes an annuity contract; FDIC doesn’t apply.” |
| What is the surrender schedule and free withdrawal amount? | Liquidity limits | Clear year-by-year charges and the free amount policy. |
| Which terms can change, and when? | Reset risk | Specific items: cap, participation rate, declared rate, rider fee. |
| What fees apply each year, all in? | Total cost | A combined annual fee estimate plus itemized lines. |
| What happens if the insurer fails? | Backstop basics | Mentions state guaranty association caps and “per person, per company.” |
| Can I get the contract and disclosures to read at home? | Time to verify details | They provide contract pages, rider pages, and prospectus if variable. |
Choosing An Annuity Without Relying On FDIC Insurance
FDIC insurance is rule-based and simple. Annuities are contract-based. Your risk control comes from picking the right type, keeping liquidity outside surrender schedules, and limiting single-issuer exposure.
Match the annuity to the job
If the job is lifetime income soon, an immediate annuity or deferred income annuity can fit. If the job is rate-based growth, a fixed annuity or MYGA can be easier to track. If you want market exposure, weigh a variable annuity’s all-in costs against simpler portfolios.
Keep a plain concentration list
Write down each insurer name and the total purchase payment or account value you have with it. This one list makes it easier to see concentration and compare it to your state’s guaranty limits.
One Page Checklist Before You Sign
- I can name the issuing insurance company and confirm it’s licensed in my state.
- I understand the product is not a bank deposit and is not insured by FDIC insurance.
- I know my surrender schedule, free withdrawal amount, and what triggers penalties.
- I can explain how interest or returns are credited, including caps, spreads, or subaccount risk.
- I have the full fee list, including rider charges, and I know the all-in yearly cost.
- I have totaled my exposure to this insurer across all policies.
- I have read the contract pages that describe guarantees, exclusions, and claim steps.
If anything feels fuzzy, pause. Ask for the sample contract, take it home, and read the pages on fees, withdrawals, and guarantees. A calm decision today beats a locked-up surprise later; keep a copy with your records.