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If a life insurance company goes bankrupt, what happens to whole life insurance benefits?
My Dad purchased whole life insurance through AXA Equitable which is all paid for. What happens if the life insurance company goes bankrupt or their assets are under water like so many other financial institutions these days? Will the benefits still be payable?
I also think it’s strange that he had to pay $700 more to this insurance company as an “adjustment”(?) recently even though the policy was fully paid for a long time ago. Is this normal?
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Filed under: Bankruptcy Info, Bankruptcy Law, Insolvency · Tags: Bankrupt, Benefits, Company, Goes, happens, Insurance, Life, whole
Example: Sun Life in Canada has bought out several companies including Prudential, Clarica and Met Life. Sun Life still maintains those policies, they just have a different logo on the letterhead now.
FYI, AXA has more than $660 Billion in assets under management. I doubt that they will be going bankrupt. Liquidity issues maybe, but not bankrupt. There are a lot of financial companies that peopel think are going bankrupt becuase of vague headlines in the news. IE: AIG…they are no where near being bankrupt, they just have liquidity problems…think of it like you get laid off work for 2 months and you don’t have any easily available cash…you use your credit card to get buy…now imagine this bailout as being your credit card, only the AIG situation has A LOT more zero’s at the end. They just need a little cash until they can free up some of thier own.
Not sure about that adjustment. Depends on what type of policy it is that you have. If it’s a U/L policy or something where perhaps dividends were paying the premiums then an adjustment could be very normal. Best bet is to speak with your agent and inquire obout what the adjustment is for and why it is what it is.
Yep, that “adjustment” happens, and if the policy is actually not whole life, but a different kind of policy, it’s going to start costing every year as the investment returns won’t be enough to pay the premium every year. I’d suggest that the policy is not “paid up”.
” Dear policyholder,
Your policy with AXA will now be serviced by XAX Life. If you have any questions, call 1-800.— —-. Please put this notice with your policy.”
If the company filed CH 11, that means that you will probably be okay and the company will operate, for your purposes, normally. Under this circumstance, it will re-negotiate with its creditors and probably come out of bankruptcy relatively unscathed. This is what most airlines have done to continue operating. They are burdened by huge obligations from past contracts, they minimize those obligations and then are able to operate in a profitable manner.