What happens if my insurer goes bankrupt?
What happens to my life insurance if my insurer goes bankrupt? Many people, who want to purchase life insurance to protect their family financially in the event of their failure, are held back by the idea of what might happen to their benefits if the insurance company goes bankrupt.
Due to the characteristics of this contract, the concern is legitimate, but it is important that you know that it is very difficult for an insurance company to declare bankruptcy overnight. There are several control mechanisms and procedures that the company must comply with before this rare event occurs.
States have created a process called “rehabilitation” to help troubled insurers regain financial balance. If even so, the company in distress declares bankruptcy, in each state there is a Guarantee Association -Guaranty Association- to which all life insurance companies belong, whose objective is to maintain the coverage of existing insurance policies. Guaranty Association will take care of paying claims.
But there the protections are not left, these state guarantee associations in turn belong to the National Association of Health and Life Insurance – NOLHGA for its acronym in English – whose main function is to guarantee that the covered claims of companies with problems. It is also in charge of transferring current contracts to health insurers.
Since its inception in 1983, NOLHGA, together with the state guarantee associations, has protected more than 2.65 million clients, guaranteed coverage for more than $ 26.8 billion in benefits, and has disbursed 9.1 billion to fulfill the promises of the insurers in trouble.
As you can see, when you get a life insurance contract, you not only receive the guarantee from the insurance company in question, but you also get the endorsement of the state guarantee association and NOLHGA at the national level. What happens to my life insurance if my insurer goes bankrupt?
However, when you choose to guarantee the financial future of yours and call Univista Insurance specialists, for more peace of mind, ask them about the qualifications of the insurer with which you plan to sign the contract. If it’s an AAA-rated company, it’s a very strong company.