By Jim Cramer

Here’s a puzzle for you – the answer to which could make or break your financial future.

Here’s a puzzle for you – the answer to which could make or break your financial future.

What kind of business takes your money; gives you a guaranteed minimum return and then invests the money in complex derivative securities or crummy real estate investments?

Wait, there's more.

What kind of business takes your money and gives you a guaranteed level of performance, a stop out, plus some upside in the S&P 500, and then not only fails to hedge, but invests in the very same crummy, toxic properties?

If you guessed the annuities market, go to the front of the line. Unfortunately, these days the front of the line in the annuities market heads right off a cliff.

It’s a funny thing about annuities. While they purport to offer protection, safety, and guaranteed income, annuities are, in reality, only as solid as the insurers that stand behind them.

Which brings me to some of the market leaders.

In the annuity market, companies like Hartford (Stock Quote: HIG), Lincoln Financial (Stock Quote: LNC), and Prudential (Stock Quote: PRU), are on a run of bad luck that would make a Vegas poker table washout look like Amarillo Slim. These companies, if one is to believe their trading patterns, seem to be on the wrong side of every trading ledger on a chronic basis.

Why do I say, “if one is to believe?” Because just like every other financial insurer, they don’t disclose much of anything except what they broadly do, and what they broadly do is disastrous.

These companies are at the scene of so many bad trading days because nobody on Wall Street knows what happens to them if their policyholders want their money. Worse, more and more annuity providers don’t have any new money coming in to pay off the old money.

Let me give you a “for instance.”

When Prudential got a ratings change that eliminated a major source of commercial paper, it became painfully obvious that its burgeoning annuity issues were painting Prudential into a dark and dangerous corner.

But the real kiss of death, is that annuity carriers have the media’s lips welded to their ample buttocks, as Forrest Gump might say. The mainstream financial press also has its bullhorn out, telling annuity customers that state regulators have everything under control; that their money is segregated and that there are no problems.

You know the old line: “move along folks . . . nothing to see here.”

To me, there is plenty to see, and it's not good. In fact, the similarities to Ambac Financial (Stock Quote: ABK), PMI Group (Stock Quote: PMI), MBIA (Stock Quote: MBI) and MGIC Investments (Stock Quote: MTG), are eerie. They were all “under control” too.

So what to expect down the road with the big annuity providers? Well, that road should be a rocky one in the days ahead, especially if it turns out that they didn’t hedge properly and their investments are even worse than we thought.

Oh, and one more point . . . if the annuity holders have reason to worry, then the stock and bond holders of these companies should worry, too. That's a domino effect that could cause a lot of damage to people's portfolios.

Stay tuned.

For a good look at the relative health of your annuity provider check online. You have to sign up to use the site (it’s free), but once you do, there is some good stuff on annuity carriers that you ought to know about.

—Brian O’Connell contributed to this article

—For more ways to save, spend, invest and borrow, visit MainStreet.com.