What If A Life Insurance Company Goes Bankrupt?

  1. 63333 POINTS
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    Peggy Mace
    Most of the U.S.
    Life insurance companies nearly always merge with another company, or are bought by another company, before they get to the point of bankruptcy. State regulators are very strict with life insurance companies to help ensure that policy owners are protected. If a life insurance company would go bankrupt, states have guaranty funds that can pay the death benefit up to a limit.
    Answered on November 3, 2013
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  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    A life insurance company, operating in your state is regulated by at least two state departments of insurance. These agencies monitor the financial health of each insurance company that they admit to do business in their state. If a company appears to be in difficulty the commissioner in your state becomes very active in conserving the assets of the company to make sure that they can keep their promises. Most states have formal arrangements that obligate other companies to assist in helping a failing company keep their promises.
    Answered on December 30, 2014
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