My husband and I both have odd life insurance policies. They are considered term policies because they do expire, but as long as we don’t die, we get all our premiums back at the end. It was a new type of product they were offering. Since we are young (25) we thought it was a good idea because basically when we turn 45 we get all that money back to do with as we please.
Anyways, what if AIG can’t pay us back in 20 years…?
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What will happen to my life insurance policy if AIG goes down?
Michael M 1:06 pm on March 14, 2010 Permalink
The credit issues mainly center around their parent company. Most of their subsidiaries have plenty of assets and would get sold to other companies to raise capital should something worse happen. This includes companies like American General Life. Would I go and purchase a new policy from them right now? Probably not. Would I worry about my current policy if I had one? No.
If you are uncomfortable then you can look start looking at another similar policy from another company but don’t drop your current coverage until you have your new policy paid and in force. You don’t want to risk a break in coverage.
mama_sayed 1:06 pm on March 14, 2010 Permalink
All insurance companies are required by law to have huge amounts of funds just for paying on insurance claims, those funds cannot be used for anything else. The people who will lose out in AIG problems, if anyone, will be the big banks who loaned them money and their stockholders
girlxstereotype 1:06 pm on March 14, 2010 Permalink
“We have a very strong message for consumers,” said David Neustadt, the deputy superintendent for public information for the State Insurance Department in New York, where A.I.G. has its headquarters. “If you have a policy with A.I.G. insurance company, they are financially strong and solvent. They have the capability to pay on any claims, and our job is to ensure that they continue to have the ability to pay.”
In the event of insolvency, entities known as guaranty funds would step in. Each state has at least two of these, one dealing with claims against defunct life and health insurance companies and the other handling property and casualty claims, as well as workers’ compensation. They’re a bit like the FDIC, which provides protection to account holders when banks fail.