If a company can't meet its obligations, the state
guaranty association pays claims, subject to some limitations, and keeps
some types of policies in force while the state Department of Insurance
takes control of the company. In Illinois, the limit is $100,000 on cash
values of life insurance policies and $300,000 on combined benefits from
all policies. The Department of Insurance will take over management of the
company to decide if it can be rehabilitated. If it cannot and must be liquidated,
the Insurance Department may help to find other insurance companies to buy
as many of the existing policies as possible so people don't lose their
coverage or their rights to benefits.
To learn about an insurance company's financial strength before you buy
from it, check with one of the insurer rating services. A.M. Best, Duff
& Phelps, Moody's, Standard & Poor's, and Weiss all rate insurers.
Each rating service uses letters to describe its evaluation of a company,
but each service's scale is different from the others. Generally, however,
experts recommend that you buy from companies that have earned a top financial
rating from at least two rating services. That's an A++ from A.M. Best,
AAA from Duff & Phelps and Standard & Poor's, Aaa from Moody's,
and A+ from Weiss. Many public libraries have publications from one or more
of the rating services, and insurance agents can provide ratings for the
companies they represent. The state Department of Insurance may also be
able to give you information about insurer rating services.