There is no single answer. The most important consideration is always preventative maintenance. Are you reviewing your insurance portfolio annually? And as part of that annual review are you looking at each insurance company’s financial strength ratings? For more information on Financial Strength Ratings including links (click here). A primary layer of protection are the State Insurance Regulatory System which uses a series of financial ratios and capital adequacy guidelines to monitor the financial well-being of an insurance company. The NAIC makes available free reports of Insurance Company Financial Data (click here). In the event, something should happen to your insurance company, there are a few different things that can happen – the company can sell off blocks of business, the company can go into rehabilitation (overseen by the respective State Insurance Department) or can be liquidated. The National Organization of Life & Health Insurance Guaranty Associations (NOLHGA) does provide some level of protection – please visit “What If A Life Insurance Company Goes Bankrupt?” in my resources section for a more detailed discussion. The Simple Dollar’s Frank Addressi recently wrote a great article on this topic “What Happens When Insurance Companies Go Bust?“.