Personal finance expert Suze Orman has issued a reminder to investors regarding the nature of annuity guarantees. While many annuities are marketed as providing a steady stream of income, Orman notes that these promises are essentially contractual obligations made by private insurance companies. Consequently, the reliability of these payments is tied directly to the financial stability and solvency of the insurer.

Orman highlights that unlike bank deposits, which are often protected by the Federal Deposit Insurance Corporation (FDIC), annuities do not carry federal backing. While state-level guaranty associations exist to provide some protection if an insurance company fails, these programs have coverage limits that vary by state and may not cover the full value of a policy. Orman advises consumers to conduct thorough due diligence on the financial strength of an insurance provider before committing to an annuity contract. She suggests looking at ratings from independent agencies and understanding the specific terms of the contract, as the complexity of these products can sometimes mask the underlying risks associated with the insurer's long-term ability to pay.