What Happens If My Life Insurance Company Goes Bankrupt?

by Richard F. O’Boyle, MBA, LUTCF

Over the last few years we have seen seemingly solid American corporations go out of business. It doesn’t happen often, but it’s a legitimate fear of all investors: What happens if my life insurance company goes bankrupt?

First, don’t panic. Each state has a guaranty fund set up by the insurers that is responsible for managing insolvent insurance company policies and claims until another company moves in and merges the outstanding policies with its own. When trouble strikes the company, you will receive a letter from the company and/or state insurance commission.

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Long Term Care Insurance: The Basics

Few individuals or families actually plan for disability and dependence in later life. Sadly, the lack of planning and self-education often results in lost opportunities to prepare for potential disability. Without the planning and discussion of these issues, we are often forced to learn quickly about available options after a traumatic accident, diagnosis of dementia, or loss of ability to care for oneself. While many of us are emotionally resilient, we usually are not financially resilient.

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How Much Life Insurance Do I Need?

Most people buy term life insurance to provide for their family’s financial needs in the event that we die while they are still dependent on us. Permanent life insurance is also a useful wealth transfer tool when used for estate planning, as well as a modest savings vehicle. But far and away, life insurance is used by families to pay the mortgage, raise the children and put them through college if we die young.

Generally the first step in the life insurance buying process is to find an agent who you can trust and work comfortably with. The agent will help you to determine how much life insurance you should carry, what type(s), and from which company.

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How to Choose a Life Insurance Agent or Financial Advisor

by Richard F. O’Boyle, Jr., MBA, LUTCF

The process of working with a life insurance agent or financial advisor should not be stressful, although frequently it is. I have spent many hours with nervous couples who were so anxious about being “sold” something they didn’t really need or understand that they couldn’t focus on the constructive task before them. This is largely because insurance agents and financial advisors have the reputation of being commission-hungry sharks.

When you entrust the management of your retirement nest egg or your family’s life insurance safety net to a professional, you should walk away with a peace of mind that you are putting your finances on the right track. A good agent is not only knowledgeable about the technical aspects of planning, but also can “consult” with you to learn exactly who you are and what you need.

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