Company, underwriters of Fixed Annuities.
Through devastating world wars, financial recessions and depressions,
sweeping epidemics, earthquakes and fires, inflation and deflation,
the life insurance industry has protected people to a degree unmatched
by any type of financial institution in the history of the world.
Today the annuity and life insurance industry provides more than a
trillion dollars of death and income protection to American consumers.
The State Insurance Department is a most vital department in each of
our fifty states. Acting on its own state's insurance laws and
regulations, it supervises all aspects of an insurance company's
operation within that state.
Required Reserves Ensure Payment of Policyholder Benefits. A large
percentage of each premium dollar calculated by actuaries for each
company goes into the policy owner's reserve fund. This policy reserve
(Legal Reserve) fund is a liability to the life insurance company.
The reserve liabilities are established as financial safeguards to
ensure the company will have sufficient assets to pay its claims and
other commitments when they fall due. Life companies that comply with
the legal reserve requirements established by the state insurance laws
are known as legal reserve life insurance companies.
Every year all legal reserve life insurance companies submit annual
statements to the insurance departments of each state in which they
are licensed to do business.
Additional Security Safeguards
1. Reinsurance: Nearly every legal reserve life insurance company
further protects its policyholders by reinsuring part of the coverage
with a life reinsurance company.
2. Surplus: The surplus is the amount by which a company's assets
exceed its liabilities. The surplus protects the policyholders and
third parties against any deficiency in the insurer's provisions for
meeting its obligations.
A legal reserve life insurance company simply does not close its doors
and go out of business declaring that all policies are null and void.
Legal reserve life policyholders enjoy personal security safeguards
unknown by other types of business.
Policyholders Protection Comes First
Today, as has been the case for many years, it is unlikely for the
policyowner of legal reserve life insurance companies to lose their
policy benefits. Through strict state insurance department
regulations, the establishment of many state insurance guaranty
associations and because of the insurance industry's history of
financial stability and public responsibility to operate in a manner
not detrimental to the welfare of the community, your policy is
secured by industry safeguards.
You can freely reprint this article as long as the
author, bio, and live links are left intact.
Jeff McLeod is a fixed index-linked retirement income annuity specialist.
To get a copy of the Buyer's Guide visit: happyretiree.com HappyRetiree.com
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