September 20, 2008

In this Financial Market, Is Your Insurance Company Safe?

This week the nation's largest insurance company teetered collapse before the US government stepped in and made an $85 billion dollar loan. This loan was needed by the parent company, however AIG has insurance subsidiaries around the world and it is assumed that these companies are well capitalized and maintain their claims paying ability. It is reported that AIG's troubles began by buying and guaranteeing mortgages and mortgage securities in other subsidiaries.

How do you know if your insurance company is safe? At this time there has not been any other companies that have reported trouble by mortgage debt obligations, however watch the marketplace carefully. If any regulated insurer could not pay its claims, you should know that each state's insurance commissioners have a protocol in place to protect the customer.The first step is rehabilitation. If this happens and liquidation is the last resort, the state has a guarantee agency to pay insurance benefits (limits apply). Procedures are in place for different lines of insurance, such as Property and Casualty, Life, Disability, Health and Long Term Care insurance and Annuities.

Companies such as A.M. Best rate insurance companies. You can also check them out at (a consumer site). You can also view information on your state's department of insurance website.

If you own an AIG policy, do not cancel, lapse or be persuaded to by a replacement policy. There will be many sales agents out there that will use scare tactics to sell you a new plan and generate a new commission. It's not panic time - yet.

Whenever you are considering buying a new insurance policy, use an
online insurance brokerage firm to shop and compare insurance policies. Although you may need to contact your local insurance agent at a later date, it is always best to be an informed buyer and in many cases you can actually receive a free quote, compare and buy insurance online.