Page 27 - Know-So Money, Hope-So Money, Retirement Secrets Wall Street Doesn't Want You to Know

commitments under the policies it has issued. In other words, the
reserve liabilities are established as financial safeguards to ensure the

company will have sufficient assets to pay its claims and other
commitments when they fall due. These assets are kept intact for
payment of living and death benefits to the insured. In other words, the
insurance company isn’t backing your money, your money is!

If an insurance company’s reserve levels fall short and it is unable to

correct the situation, it goes into what is called receivership. The
remaining insurance companies in the state legal reserve pool must
assume the liabilities and obligations of the insurer. The reserve pool
protects fixed annuity investors as well as those who purchase other life
insurance products or policies.

Third, Legal Reserve Life Insurers are members of reinsurance
groups. If you purchase an annuity from Company A, Company A has
secured agreements from Companies B, C, and D to help cover its
liabilities. Each company has from four to a dozen other companies
backing its contracts.

Fourth, insurance companies don't have to comply just with one
governing body like banks, they must satisfy the safety requirements of
all 50 states. Every year all legal reserve life insurance companies
submit annual statements to the insurance departments of each state in
which they are licensed to do business. These are detailed reports of an
insurance company's financial status that is important in evaluating the

company's solvency and compliance with the insurance laws.
Companies found not to comply with their reserve requirements have
their operations suspended immediately and are prohibited from selling
more policies until they have taken corrective action.

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