Who is safe to write
While it may be in a company's best interest to pay, in a bankruptcy the state's insurance pool would kick in and pick up the policies and pay the claims. That pool is made up of every insurer that does business in that state.While it might make some sleep better at night beleiving management wants to protect the company's good will and not declare insolvency, yet if they run out of money management's intentions count for nothing. You're partially correct. The state's insurance pool would pay, but only up to $300,000 for a death benefit. The issue isn't whether companies will go out of business. They will. The intention of an individual company doesn't matter. The issue is whether the industry as a whole will pay the claims. Historically, they have 100% of the time.
The $300k payout; isn’t that state by state or is that every state?Yes and yes. I think that it is state by state, but every state has $300,000.* You would think that since it's state by state, the limits would be all over the place. However, since it's completely funded by the insurance industry and the industry is committed to paying all death claims, this limit is fairly inconsequential. *I'm not 100% sure that I'm correct, but I have no knowledge of any state being different.
hey guys, this might help. you can find out each state’s guaranties, they’re going to vary.nolgha . com