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Dear LifeQuote Client and Policy Holder:

Many of you who own life insurance policies with AIG or one of the companies they own or control are wondering what to do after the meltdown that caused the global insurance giant to get a government bailout. Do you cash in your whole life, universal life insurance? If you own a term life policy do you switch companies?

There are many fears to consider. Some are even wondering if the Federal Reserve's bailout of AIG means that now the government owns your insurance policy. The explanation you get from CNN's financial analysts is that the AIG on Wall Street is an umbrella company that owns stock in a lot of smaller insurance subsidiaries, and that these are separate entities. They tell us that your individual policy is held with the subsidiary in your states, which are tightly regulated and are required to back up your policy. But even if that is absolutely true, I'm sure you're skeptical and are still wondering what the future holds for policyholders.

Here are some common sense suggestions that may give you peace of mind and fall into the category of 'better safe than sorry." If your health is still as good as it was when you bought your existing policy it may be a good time to shop around for another term life insurance policy with a different carrier-one that is currently more financially secure. Even if you are much older now than when you first bought coverage, you might actually find a new policy that will save you money since prices have been steadily decreasing for years.

Whole life, universal life, and other permanent cash value products are a different story. You will be penalized with surrender charges if you leave in the early years. This may really cost you if you cash it in now, leaving you in the proverbial "catch 22." What should you do? First of all, DO NOT discontinue coverage and leave yourself uninsured.

You may consider keeping your existing coverage and buying an additional cheap term policy from a company without any financial difficulties. You can buy a 10 or 20 year term life policy for so little money it won't upset your budget. You can always discontinue the policy later when things improve. There is no obligation. This way if your life insurance company has problems your family is protected with the new coverage if you were to die.

So should your worse fears be realized and you ultimately want to get out of one of these permanent cash value policies, many term insurance policies guarantee you the right to convert to universal life or whole life for several years. There are often IRS options to facilitate moving your cash from one policy to another that can give you tax advantages. See your personal tax professional for advice.

The bottom line is this--- if the economic turmoil is making you lose sleep, have a back-up plan. If getting an inexpensive term life policy gives you the buffer that you need, it might be a small price to pay to for some much-needed peace of mind in these troubling times.

Sincerely,