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This is true and a valid point, but as was the case with Genworth, another more financially stable carrier will usually come along and assume/purchase the block of business of another carrier, should that carrier become insolvent and run into any hiccups. There's also usually a State Guarantee Association/Fund as others have mentioned, which would cover at least a minimum amount of the death benefit (usually very minimal and around $200-300k, depending on the specific state where the policy was written). This way, the policyholders aren't left completely out in the cold, and without their life insurance death benefit - Also, I could be wrong, but to my knowledge, there has never been a situation where policyholders have been left on the hook by an insurance carrier who has gone insolvent and has not had another carrier come in to "pick up the tab"?
Of course in an assumption scenario, the new carrier will usually absorb all of the initial contractual guarantees which were put in-place by the initial carrier. Yes, your annual premium statement might have a different carrier's name, but it's typically not a doom-and-gloom sort of thing.
Also, although no one can predict the future, going with a carrier like Prudential, Banner Life, Protective Life, or Transamerica, etc., who all have around a 90-95 Comdex score is usually a much better value than another carrier who has a 100 Comdex score but is 20-30% more in premium for the life of the contract - Do the math, this 20-30% over the life of the contract equates to thousands of dollars in extra premiums. I always equate this 95 vs. 100 Comdex score argument to someone having an 800 FICO vs. a 740+ FICO. Yes, you can brag to all of your friends about your 800 FICO score at a cocktail party, but the person with a 740+ FICO is usually going to qualify for the same percentage rate on a car loan or mortgage, assuming that all things are equal. Of course, Northwestern Mutual and New York Life agents will be the first to tell you about how great they are because they have a 100 Comdex score, as that's how they're trained to sell and that's the ship that they will go down on.. It's quite comical actually.
Of course in an assumption scenario, the new carrier will usually absorb all of the initial contractual guarantees which were put in-place by the initial carrier. Yes, your annual premium statement might have a different carrier's name, but it's typically not a doom-and-gloom sort of thing.
Also, although no one can predict the future, going with a carrier like Prudential, Banner Life, Protective Life, or Transamerica, etc., who all have around a 90-95 Comdex score is usually a much better value than another carrier who has a 100 Comdex score but is 20-30% more in premium for the life of the contract - Do the math, this 20-30% over the life of the contract equates to thousands of dollars in extra premiums. I always equate this 95 vs. 100 Comdex score argument to someone having an 800 FICO vs. a 740+ FICO. Yes, you can brag to all of your friends about your 800 FICO score at a cocktail party, but the person with a 740+ FICO is usually going to qualify for the same percentage rate on a car loan or mortgage, assuming that all things are equal. Of course, Northwestern Mutual and New York Life agents will be the first to tell you about how great they are because they have a 100 Comdex score, as that's how they're trained to sell and that's the ship that they will go down on.. It's quite comical actually.
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