What happens when your life insurance agency gets acquired by another firm? Does everything change or stay the same? Are there guarantees your policy will not be affected by an ownership change? A recent series of life insurance company selloffs have brought these questions to the forefront. Here’s a look at what to expect when your life insurance company gets a new owner.
Recent Life Insurance Industry Changes
Three key insurance industry events have raised questions involving how life insurance policies are protected when company changes occur. Principal Financial discontinued offering life insurance policies in September 2021, but it will continue to honor and serve existing policies. Meanwhile, Allstate and Voya sold their life insurance services to other companies.
Financial experts have said life insurance policyholders do not have to fear anything about these changes. These deals usually require agreements by the acquiring company to keep policies in place. However, customers should still check up on their policies to ensure everything remains consistent.
When a New Company Handles Your Policy
Since your benefits are guaranteed, you won’t have to worry about any changes made to your policy. Whenever insurance policies are transferred from one company to another, the shift is closely monitored by state officials. If an insurance company fails to honor your contractual terms, policyholders can file complaints with the state insurance commissioner.
In the case of an insurer going bankrupt, your policy is still protected, as it can be transferred to another insurer with the help of your state’s insurance guaranty association. This organization also issues policy claim payouts up to about $300,000. Insurers are required by the states in which they operate to be affiliated with a guaranty association in order to conduct local business.
Certain life insurance policies such as whole life or universal life plans have investment components that could become affected by ownership changes. It depends on whether you choose your own investments or allow the company to pick them for you. If you depend on the insurer’s expertise, a new company owner can change the investment strategy.
However, keep in mind any investments tied to public or private markets carry a certain amount of risk in the first place. Many life insurance policies earn substantial gains over time, but there are no guarantees, especially when the entire economy goes through downturns or uncertainty.
Preparing for a Life Insurance Merger
When your life insurance provider announces a sale of the company to another firm, be sure to keep all forms of communication from them for future reference. A company announcement letter should explain the details of the merger and what to expect from the new provider. It should also assure you that no changes will be made to your policy as a result of the merger.
Contact the agents at Young Insurance today to learn more about the dynamics of life insurance policies. We know how overwhelming the options can be to protect your family with life insurance, so we’re here to help you simplify and customize a special plan for your personal interests.