What Are Annuities Invested In?

Annuities are contracts issued by life insurance companies. Insurance companies invest all funds collected for insurance and annuity contracts in their general fund. Each company manages its general fund differently, but most general funds contain similar investments.

Bonds

The majority of general account assets at insurance companies are typically invested in investment grade bonds.

Private Equity Investments

Many insurers also hold private equity funds in their general accounts. Private equity funds are ownership interests in businesses that are not traded on stock exchanges

Real Estate

Real estate holdings function similar to bonds in a financial cash-flow sense. Because of this, they are often held by insurance companies.

Common Stocks

While volatile, some insurers do buy stock for their general accounts to provide additional diversification beyond the more common bond and real estate holdings.

Loans against Life Insurance Policies

When insured individuals take loans against their life insurance policies, the loan is paid back with interest to the insurer's general account. This loan is an asset of the company, and the interest from the loan makes up part of the earnings that the entire general account earns.