About Us
President’s Message (Fall 2008)
Today's news is focused on the economy as we shift from election mode to the future of our country. Understandably, many clients have asked how these difficult economic times are affecting the insurance industry and ultimately, their policies. After all, the $150 billion federal bailout of insurance giant AIG (American International Group) is at the center of the crisis.
First of all, it's important to know that AIG is an international financial holding company with business subsidiaries ranging from aircraft leasing to investment services and insurance. The financial issues facing the firm are the result of investments in risky mortgage-backed securities initiated by AIG's financial products companies, not their insurance subsidiaries.
Insurance companies are heavily regulated and must maintain cash reserves to cover potential liabilities. State guaranty funds also provide a safety net. If an insurance company is unable to pay claims, the fund will provide coverage.
In the unlikely event that an insurance company does become insolvent, the state regulator can take over its management. The state will ensure that policyholder claims are paid by the insurance company or the state guaranty fund.
The insurance subsidiaries of AIG are financially solvent and able to pay their claims, according to the National Association of Insurance Commissioners. State regulators and AIG's new management are taking steps to ensure that insurance customers remain protected.
So, your insurance policies are not in jeopardy. You should continue to pay premiums to avoid policy termination. And although it is a personal decision, we recommend you carefully review policy terms before cashing in or switching to a different insurer. Policies may contain surrender charges or cancellation penalties, and you could lose your investment by switching whole life and universal life policies that have cash value.
We urge you to check with your broker before considering any changes to your insurance coverage. Although we can't always predict unforeseen circumstances, we monitor our carriers carefully and take that responsibility seriously. As always, your contact at WFL is well informed and ready to help you through these rough times.
Sincerely,
Dennis Flatness
President