My in-laws paid on a life insurance policy for years.They have paid approximately $32,000 into it , now the insurance company went under....Now they have no life insurance and have lost everything they put into it. Can this happen? Is this legal?
That's horrifying! Sorry to say that it's entirely possible that nothing can be done if the company is gone but I'd certainly try to see if there's any recourse. You could check with your state insurance commission. They may be able to guide you. Good luck with this. We'd love to hear how you're doing. Carol
Yes, this can happen. Sometimes there is a settlement, seeking to get some type of recovery for victims, but even then the money may not materialize. This is why we are told to only buy insurance from insurance companies that are financially well backed. I bought auto insurance one time from a company that went under. I am glad that I learned it before anything happened to me. There was talk of how we would receive money back, but the money never came. Good luck getting something back.
I did find some helpful things online. I hope the moderators will let the link below stay for a little while. Your state may be managing the bankruptcy of the insurance company, so all may not be lost. There are special rules for health and life insurance. That is reassuring.
Just adding my suggestion of contacting your state's department of insurance.
Also, when you wrote that the company "went under", did you mean that it went out of business through bankruptcy, through dissolution, and/or by chance did it file a Chapter 11 for arrangement in bankruptcy, which would mean that it will attempt to work out an arrangement to satisfy its liabilities?
Executive Life Insurance Company of New York (ELNY), was seized by the state of New York, who sold the majority of the business to MetLife. So if this is the company, contact Met Life or the NYS Insurance Department in Albany.
Insurance companies don't go Chapter 11, they are taken over by the state insurance department where they operate. The state then allocates the assets to a restructuring company who sells off the Life Insurance and modifies the payouts on Annuities.
Pam, you are correct; I was in error. Thanks for pointing this out to me. I apologize to all who read my post and may have been accidentally and unintentially misled.
I did some quick checking to determine how this works and found some info that may help Lana. Hopefully this link won't be deleted, but if so, the information can be found under the "guaranteed coverage" subsection of the National Organization of Life & Health Insurance Guaranty Associations' website link entitled "What Happens When an Insurance Company Fails?"
Good luck with this. We'd love to hear how you're doing.
Carol
website: insuranceproviders/what-happens-if-your-life-insurance-company-goes-bankrupt/
Also, when you wrote that the company "went under", did you mean that it went out of business through bankruptcy, through dissolution, and/or by chance did it file a Chapter 11 for arrangement in bankruptcy, which would mean that it will attempt to work out an arrangement to satisfy its liabilities?
I did some quick checking to determine how this works and found some info that may help Lana. Hopefully this link won't be deleted, but if so, the information can be found under the "guaranteed coverage" subsection of the National Organization of Life & Health Insurance Guaranty Associations' website link entitled "What Happens When an Insurance Company Fails?"
nolhga/policyholderinfo/main.cfm/location/insolvencyprocess
Thanks again for correcting my error.