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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