by Guest » Sat Oct 01, 2011 12:01 pm
Hi,
I've a whole life insurance policy with quite a premium, but owing to the economical conditions I'm very apprehensive about the fact as to what happens if my insurance company goes bankrupt?
Will I lose all my benefits after paying premiums for years? will my family suffer if the insurer goes bankrupt? Can anyone throw light on this issue please?
I've a whole life insurance policy with quite a premium, but owing to the economical conditions I'm very apprehensive about the fact as to what happens if my insurance company goes bankrupt?
Will I lose all my benefits after paying premiums for years? will my family suffer if the insurer goes bankrupt? Can anyone throw light on this issue please?
Posted: Tue Oct 04, 2011 06:22 pm Post Subject:
what happens if my insurance company goes bankrupt?
You are unlikely to lose everything in such an instance, but you could suffer some loss.
Every state has an association that guarantees some aspect of life insurance policies under such circumstances. Some provide for payment of the death benefit up to $500,000, or policy cash value up to $200,000 or more. No guarantee association covers 100% of all policy benefits without limitation.
Ideally, if you have not died at the time your insurance company "goes bankrupt", another insurance company will buy/assume your policy under all the terms and provision of the contract. You will still be insured, and you will still make your premium payments, but to another insurance company.
Only when there is no insurance company willing to do this will the Guaranty Association become involved in cancelling your policy and providing the guaranteed benefit. If that leaves you "less than whole", you make a claim against the "estate" of the deceased insurance company for the balance of your policy value. If there is any money available to pay that claim, you might get some of it.
You can look here for more information: http://www.nolhga.com/
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