What happens if your Life Insurance Carrier goes bankrupt

By | April 13, 2009
Great article from U.S. News on what happens when your life insurance carrier goes bankrupt. There are safety precautions built in with Life Insurance Carriers, so hopefully that help ease your concerns. Check out this great article…
clipped from www.usnews.com
When Insurers Go Bankrupt, Who Gets Paid?

Dear Alpha Consumer,

With all of the upheaval in the financial sector, I’m worried my insurance company — which provides my life insurance — will go under. If that happens, will my family be left with anything?

I took your question to Sean McKenna of the National Organization of Life and Health Insurance Guaranty Associations, which represents the state associations that guarantee insurance policies

in the event that an insurer becomes insolvent. He had mostly good news for you.

First, some background on how these guaranty associations work: Every insurance company is required, by law, to participate in (and pay into) its state’s guaranty association to ensure its policyholders are protected. Anyone who takes out insurance is automatically protected. Many companies, of course, operate in multiple states, so if you want to know which state’s association is protecting you, give your state insurance department a call.
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