What happens if a life insurance company goes bankrupt?

A problematic situation may arise when, at a certain point in time, the insurance company will not be able to fully pay the bills legally issued to it, or when the formed reserves turn out to be less than the corresponding standard determined by law.

These moments are clearly monitored by state supervisory authorities and immediately take preventive measures against such a company.

The consequence may be the adoption of one of such decisions as the cancellation of the last operations of the insurer, including financial ones, the reorganization of the insurer, the liquidation of the insurer, or its reorganization.

The fact is that in such a situation, the client has the right to choose whether to withdraw his own funds from the company, or transfer them to another insurer.

In the latter case, the client will only benefit, because he will become a client of a more prestigious insurance company without financial losses or additional costs on his own part.

Unlike banks and other organizations, insurance companies operate under long-term contracts and therefore have significant value – their own client base, which generates new and new payments every year.

Entering the life insurance market and winning customers is costly for investors.