Suze Orman says your annuity guarantee is 'only as good as' the insurer's balance sheet — here's why

Financial advisor Suze Orman cautions that annuities' guarantees are only as reliable as the insurer's financial health. She explains that annuities, which promise a steady income throughout retirement, are tied to the issuing company's ability to pay claims. If the insurer faces difficulties, the annuity's guarantee becomes uncertain.

Unlike banks, annuities are issued by insurance companies, and they aren't federally protected like certain deposits. Instead, annuities are backed by state guaranty associations, which provide a less robust safety net compared to the FDIC. The FDIC insures bank deposits up to $250,000 per owner, while state guaranty associations cap coverage at $250,000 or $500,000, depending on the state.

Annuities come with various features and fees, so it's crucial to research thoroughly before committing.