What Happens When A Company Becomes Insolvent And Is Liquidated?
Free Insurance Quote Comparison
Secured with SHA-256 Encryption
UPDATED: Jul 16, 2021
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.
When an insurance company becomes insolvent, other life insurance companies that are headquartered or do business in the same state will rescue the faltering company. This is recognized as one of the responsibilities of companies that do business in that state. The state’s life companies can be assessed by the state regulators to help with the bailout, but frequently (especially if it is a small company that is in trouble), a larger company will take it over on their own initiative, or with only the slightest encouragement by the regulator.
The policyholders of the failed company may be unable to withdraw money from their policies for some time, but eventually they will probably get all, or nearly all of what they are entitled to under their contracts.