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Life insurance policies provide your family the much needed financial stability in case of your sudden demise. This becomes all the more essential when the breadwinner of the family is gone suddenly. Your family can still meet their vital needs and maintain the same standard of living that was available that they had earlier. However, what if the insurance company goes bust?
Like in case of a bank, your insurance company could also go bankrupt. However, this does not mean that all your hard earned money is gone forever and you are left penniless. This is because every Insurer is monitored by IRDA (Insurance Regulatory and Development Authority) on a regular basis. The insurer is also supposed to maintain a solvency margin for recovery in case of an unfortunate incident.
There are various measures and regulations undertaken by the government and IRDA so that your money is always safe, even if the insurer goes bust. There are various strict guidelines and regulations that ensure that one or two serious incidents or financial loss doesn’t result in the company going down. The two main acts that cover all these regulations and are the foundations of various activities that are carried out in the field of insurance are:
On the other hand, to be doubly sure, you might invest your money with different insurers in different policies. This reduces the Risk of losing all your insurance cover in case one of the insurers goes bust. However, it has a downside that you will be paying a Policy fee for multiple policies to different insurers. Also, you will be missing out on the discounts and other benefits that one insurer gives on a single bulk policy. Also, when you get life insurance, you must go for online life insurance that will enable you to choose the best and most reliable insurance company.
With the strict guidelines and regulations, it is almost impossible for any insurance company to go bankrupt in India. You can therefore be confident and fully Assured that your hard earned money will be safe with the insurance companies. If at all anything unfortunate happens, IRDA and the Finance ministry in the Central government will ensure that your and other customers’ issues are addressed and your money recovered.