Term life insurance and AIG

[SleeplessMommy]

I am supposed to have term life insurance ... just this week I am starting the paperwork to finally get it. AIG was highly rated last week. And what happens? AIG (the company I was going to go with) gets downgraded :
http://money.cnn.com/2008/09/15/news...ex.htm?cnn=yes

As far as I understand, if your life insurance company goes belly up, the policies go away. (As in you are no longer covered, they are not transfered to another company)

Anyone know where to get "stable" life insurance? A financially sound company?

[llamalluv]

The government will save you.

http://caps.fool.com/Blogs/ViewPost....37797932408075

Most importantly, rest assured that you're probably still covered. Almost every state has a "guaranty association" or "guaranty fund" that handles insurance bankruptcies much like the FDIC handles bank failures. Guaranty funds pay your claims up to a certain limit, usually $300,000 for home, auto, and life insurance policies, if your insurer becomes insolvent. That level of coverage is more than enough for the average consumer's insurance claim.

[Jilian]

We're in the same exact situation! We just had our medical exams for AIG term policies 2 weeks ago. I'm expecting to receive a policy soon. We went with AIG because they were #1 and we were willing to pay a little more for the best. Now they are having trouble : I'm wondering if it is too late to change to another company? I'd be really upset if they went under and we lost our policy then had to pay more for a new one because we were older.

[Amila]

My AIG policy just got approved TODAY : Should I think about switching? Grrrrrrr

[Sarah8Jane]

Since you are just now getting your policy, I would consider going with someone else. If you already have paid into the policy I would have to weigh that.

Another poster indicated that the guaranty association would cover your policy if you had a claim. This is true, but some states only cover up to $100,000 for certain products (Alaska included) so be sure to check with you insurance department (they cannot tell you what to do, they may only give you basic information).

AIG may very well sell off their Life insurance companies. Other insurers may be interested in buying their business, but as far as I know nobody has addressed that yet.

The National Association of Insurance Commissioners is scrambling to get communication out to people. Look for a statement both from your state and the NAIC in the next couple hours.

[SleeplessMommy]

Thank you! It looks like PA is $300K limit... just the amt of insurance I was going to get :-) Though the lower cost provider (transamerica or something like that) is sounding nice right now.

http://www.ins.state.pa.us/ins/cwp/v...q=539500:thumb

[AuntNi]

We have our term life with AIG, too. AIG's sterling rating/reputation is the reason we chose them. Today, of all days, is when they withdraw our premium from our checking acct.

I'm curious how it's going to work, also. I'm just two years older (but 40 pounds lighter! : ) than when our policies were written. So I would hope we could get similar coverage for about the same price from a different insurer if we have to.

If I understand it correctly, it's because they insured banks against losses from subprime loans - is that your understanding? I'll tell you: when I sat in on a meeting in the mid-90s where they were discussing marketing subprime mortgages (I was a secretary at the time,) I couldn't imagine something like that could bring down the world's economy!

[Sarah8Jane]

Insurance companies have to have reserves on hand to meet claims. They are allowed to invest other money in whatever way they want. I think they made poor investments and are now asking their subsidiaries to help them out (i.e. Life Companies).

Here's the press release from the NAIC: http://www.naic.org/Releases/2008_docs/AIG_solvency.htm

[Amila]

Ok, great- so the state guaranty can give me $300,000 if DH dies. BUT his policy is for $750,000. Which is what we have been paying, based upon our projected needs should that ever happen. So how the heck is that supposed to make me feel better- I mean, something is better than nothing, but it isn't nearly close to what I would need.

[Belleweather]

I work in life insurance. I really, really wouldn't buy insurance with AIG right now. If you're within the early part of your policy or have a "free look" provision, I would immediately cancel and go with someone else.

I could write a whole screed here from an insurance regulatory persective, but suffice it to say that while there is a chance that AIG could restructure it's self, there's also some shady and desperate things going on behind the scenes to even bring it this far.

Bottom line; with term life insurance, you really want a company that is going to be around for the long term. There's a better than 50% chance that AIG isn't going to be, so it's a bad bet for people who are buying life insurance policies.

[Jilian]

Originally Posted by Belleweather

I work in life insurance. I really, really wouldn't buy insurance with AIG right now. If you're within the early part of your policy or have a "free look" provision, I would immediately cancel and go with someone else.

I could write a whole screed here from an insurance regulatory persective, but suffice it to say that while there is a chance that AIG could restructure it's self, there's also some shady and desperate things going on behind the scenes to even bring it this far.

Bottom line; with term life insurance, you really want a company that is going to be around for the long term. There's a better than 50% chance that AIG isn't going to be, so it's a bad bet for people who are buying life insurance policies.

Thanks for this! Which company would you recommend? I don't even know how to pick right now. I thought I was picking the top company and paying a little more for the best and that abviously backfired! Do I chance going with the second best?

[Nora_SEA]

I have my exam tomorrow morning. I was sitting here thinking we had gone with AIG, but it's American General Life and not AIG - or are they the same?? We went through Zander Insurance Co and it was the best deal for us. Any input? There were really mixed reviews on them...it's hard to understand how someone can rate the exact same product a 1 and another person rate it a 5!

[Jilian]

Originally Posted by Nora_SEA

I have my exam tomorrow morning. I was sitting here thinking we had gone with AIG, but it's American General Life and not AIG - or are they the same?? We went through Zander Insurance Co and it was the best deal for us. Any input? There were really mixed reviews on them...it's hard to understand how someone can rate the exact same product a 1 and another person rate it a 5!

We have the same and went through Zander. We chose AIG too and they call it "american general" so I'm confused too.

[Nora_SEA]

It must be a subsidiary company of AIG.

[honeybunmom]

The AIG in the news is the parent holding company. Your insurance is most likely held by a subsidiary and governed by state law. Found this great, short article in WSJ that explains it.

[acegmom]

AIG bought American General

more than 5 years ago. My husband worked at American General in Houston from 2000-2003. AG was great to work for, but the buyout changed the company totally.

I'm just relieved we rolled over our 401K (which was all AIG stock, including the matching) before all this came to pass.

to everyone impacted by this financial mess.

Jill H. (lucky mom to Amelia 18, Camille 16, Evan 13, and Gracie 11)