Friday, 24 Sep 2021

Life Insurance: Could Your Policy Be At Risk

Your life insurance policy is your way of ensuring your family’s financial safety and security in case or your early demise. But with the economy in so much trouble and many big name companies going bankrupt it is only natural to wonder what should happen if the company holding your policy should file for a bankruptcy. As well as what steps you can take to ensure your family continues to be protected.

What is the Risk?

The truth is there is some slight risk that the company holding your life insurance policy could fail. It is a very low risk but it is still there. Understanding exactly what would happen to your policy in a worse case scenario as well as how to minimize your risk can help you to protect your life insurance policy and your family.

What happens when a life insurance company fails?

Life insurance companies are regulated by the state that they are based in. What that means is if a life insurance company goes to the state insurance commission to advise them of an immanent failure the state must go to the aid of the company. This includes helping the company to get back on it’s feet. If helping the company recover does not work then the state will take over and liquidate the insurance company’s assets. But what does that mean for the owner of the life insurance policy?

Guarantee Associations

Each state has a guarantee association that is place to protect the life insurance owner if the insurance company fails. The association will cover each individual life insurance policy up to $100,000. If your policy is over $100.00 you may have a problem.

The best way to safeguard your life insurance policy is to make sure the life insurance company you choose is reliable. When choosing your policy be diligent by checking the insurance company’s financial rating to reduce your risk.

Should you purchase multiple life insurance policies?

If you have carefully chosen the most reliable insurance company then chances are you do not need to have multiple life insurance policies in place to mitigate the risk. Multiple policies are expensive to maintain. If you have chosen carefully your policy should be safe. You should also keep a look at life insurance monthly cost so that its remains within the budget and you can enjoy full benefits from your policy.