On the Money

Evaluate Your Insurance Company by Brion Collins, managing member of Delafield-based Lake Country Wealth Management

The insurance industry has not been exempt from federal bailouts and financial distress, and in today’s financial landscape, consumers may want to learn about risks to their policies, annuities, or insurers themselves.

In this financial climate, buying a new annuity from a top-rated company is especially wise.

You can judge an insurance company by its Comdex ranking, an average percentile ranking of credit ratings provided for life and health insurance companies by firms such as Moody’s Investors Service, A.M. Best Company and Standard & Poor’s Corp. If an insurer has a Comdex rating of 85, for example, its strength and solvency have been ranked superior to 85 percent of the insurance companies in the index.

If an insurance company has been downgraded three or four times, you want to keep an eye on it.

There are state guaranty funds in case insurance companies fail. While annuities aren’t FDIC insured, you may have up to $100,000 of coverage by your state’s guaranty association in case of failure. We’re talking cash value. Death benefits are often protected by states to a limit of $300,000.

Read more in the latest issue of BizTimes Milwaukee.

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