UPDATED: Jun 29, 2020
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There has been some concern across the country over the past several weeks regarding the stability of our nation’s financial system. We have seen several large financial institutions either collapse, on the verge of collapse, saved by the federal government or acquired by other companies. One such company, American International Group (AIG), is the parent company of one of our nation’s largest term life insurance companies, American General Life Insurance Company.
Last month, we blogged in detail about the financial difficulties faced by AIG. Today, we’d like to provide an update and explain why American General Life is still an excellent company and a good choice for your term life insurance needs. Detailed information can be found in this fact sheet released by American General Life.
Surely you are aware of the federal government’s decision to provide a line of credit up to $85 billion to AIG. In return, the government will acquire the right to receive up to a 79.9% stake in the company through stock options. This lifeline extended by the government will allow AIG to restructure itself and sell off some of its assets to pay back the line of credit.
The important point to note is that the financial difficulties experienced by AIG are limited to AIG and do not impact the financial stability of subsidiaries such as American General Life. Life insurance companies are regulated at the state level, and as such, are required to meet financial standards set by the states to ensure adequate reserves are held to meet the ongoing obligations of the companies. In other words, at no point were any policies issued by American General Life in any danger. In fact, the National Association of Insurance Commissioners recently released a statement regarding the company to help calm the nerves of policy owners.
So despite all the negative news surrounding AIG recently, it is important to understand why we stand behind American General Life and continue to recommend the company’s term life insurance products to our customers when appropriate.