| Americans fear for their life insurance after financial turmoil |
Americans who have ploughed their savings into life insurance and annuity-linked pension funds were running scared yesterday as financial titans collapsed around them.
"We're receiving phone calls that we wouldn't usually get," said Robert Willis, Executive Director of DC Life and Health Insurance Association, part of the national network that guarantees insurance policies.
"Given what's happening with AIG and Lehman Brothers, people are looking at their life insurance and annuity products and are concerned about these companies going under and what the impact would be on them," he said.
Wall Street icon Lehman Brothers filed for bankruptcy in New York on Monday after suffering massive losses from the subprime crisis of loans to high-risk customers.
The following day, the US Federal Reserve stepped in with a $85-billion bail-out of American International Group (AIG) after the insurance giant also fell victim to the mortgage subprime lending meltdown.
In a statement issued Tuesday, AIG assured its life insurance clients that their policies were not at risk.
Willis tried to reassure them, too, by explaining how warranties such as those provided by DC Life and Health work. Most of the guarantees allow the investor to recover his or her initial investment plus any earnings, up to a ceiling of $300,000 in death benefits.
But the ceiling is only applicable once per person. Someone with three separate pension plans, each worth $200,000, for instance, is protected only to the tune of $300,000, said Willis.
1 comments:
This news is really very shocking. This is why it is always suggested that a person should choose an insurance provider carefully before buying an insurance scheme through them.
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