Is Your Insurance Money Safe?

Insurance PolicyFor many future retirees, life insurance is an important component of retirement planning. Policies that build cash value, such as whole life and variable universal life policies, can be tapped for additional retirement funds if necessary.

The recent debacles with the stock market and other securities have many wondering: is my money safe in an insurance policy. The answer: a definite “maybe.”

Insurance companies are required to hold sizable reserves. They are generally forbidden from making wild speculations with the money. Unfortunately, though, many of the mortgage-backed securities that have fallen to a fraction of their previous values were considered rock-solid before the “crash”—so solid, in fact, that they received highest safety rankings from the bond rating services.

How is your insurance company doing? You can find out, but it will take a little research. Check out the Web sites of the primary rating services: Standard & Poors, A. M. Best, Moody’s National Association of Insurance Commissioners (NAIC) is an organization representing the insurance departments of all 50 states.

You can also check out the site of the

Finally, the National Organization of Life and Health Insurance Guaranty Association (NOLHGA) can be a useful resource. This organization provides, among other things, information on state guaranty associations and insurance companies that have failed or are in danger of failing.

We wish there were an easy way to know if your money is safe with an insurer. The bottom line: if you want peace of mind, you’re going to have to do a little homework. The time and effort invested, however, will be well worth it.

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