Question: Are insurance companies likely to fold in the USA?
In the United States, insurance companies are regulated as to the type of assets that they can invest in and have strict requirements for reserves.
This does not guarantee solvency but has proven to be a successful system. When life insurance companies have failed so far, another company has typically taken over their obligations and policies.
Even the AIG life insurance companies should be fine as they did not take the risks, the parent company did and each life insurance company stands on its own.
I do suggest that one look at the financial strength ratings from AM Best, Standard & Poor’s, Moody’s and Fitch. Look for an A+ or better rating from AM Best and an AA or better (Aa from Moody’s) from S&P and Fitch.
There’s also an interesting article from forbes.com on this entitled “Safety in Numbers.” http://www.forbes.com/forbes/2008/1013/060a.html