Many policyholders of AIG and other insurance companies are asking the questions how safe is my life insurance policy? It’s a reality of the 21st century that even the largest and most reputable insurance companies can become subject to financial failure. In Canada three insurance companies have gone bankrupt:

• Les Coopérants on Jan 3rd 1992
• Sovereign Life on January 18th 1993
• Confederation Life on August 11th 1994

In each of these instances Assuris – which was founded 1990 and is not for profit organization that protects Canadian policyholders in the event that their life insurance company should fail – was called upon to deal with the insolvency. Through the three insolvencies, Assuris’ coverage has protected almost three million people representing over 10 % of Canadians.

Below is a summary of how Assuris protects Canadian policyholders if a member insurance company becomes insolvent. You can find out if your insurance company is a member company if you visit the website of Assuris.

• Life Insurance death benefits up to $200,000 or 85% of the promised Death Benefit,
• Life Insurance cash values up to $60,000 or 85% of the Cash Value, whichever is higher.
• Critical Illness benefits up to $60,000 or 85% of the promised benefits, whichever is higher
• Disability Insurance benefits up to $2,000 per month or 85% of the promised Monthly Income benefit, whichever is higher.
• Long Term Care benefits up to $2,000 per month or 85% of the promised Monthly Income benefit, whichever is higher

One strategy to minimize risk of an insurance company bankruptcy is to take out policies with multiple insurance companies i.e. rather than an applicant taking out one $400,000 policy, he/she could take out two separate $200,000 policies. The policies have to be with separate insurance companies or Assuris will treat it as one policy. This strategy does have a downside you will be paying multiple policy fees and many insurance companies give volume discounts – the higher the coverage amount the lower the cost per thousand.