How the state protects insurance companies
When an insurance company faces financial problems, each state’s guarantee system comes to the rescue. Most states have special organizations that accumulate insurer contributions to cover payments to people in the event of a LIC bankruptcy. All licensed LICs are mandatory members of these funds.
If the insurance company becomes financially unstable and cannot pay the insured’s claims, the state insurance commissioner can take over the management of the troubled organization. First, the commissioner will try to rehabilitate the company in order to improve its financial situation. If this plan does not work, a liquidation commission comes to replace the commissioner. After that, the policy of the troubled company is transferred to another LIC. This scheme garnishes subsequent insurance payments to customers. If the insurance company does not have enough funds to pay the insured’s claims, the state fund will be liable for the obligations of the bankrupt.
Mortgages are rarely being insured. Most loans could not be insured.
In most states, insurance benefits are limited to the following amounts:
$ 300,000 life insurance benefit
100,000 dollars life insurance
$ 250,000 annuity
$ 500,000 in payments to medical organizations
$ 300,000 Long Term Care Allowance
$ 300,000 disability benefit
$ 300,000 in accident payments.
If your insurance policy exceeds these limits, most likely no one will cover the difference, but you can apply for compensation after the bankruptcy property is sold.
Most insurance claims are to be processed with attorney only
In the states, the estimated cost of living of an air passenger is set by the Department of Transportation at $ 3 million. The amount intended to be paid from the budget in the event of the death of a US citizen as a result of a plane crash is periodically reviewed for inflation. For example, in 1997 the life of a “conventional” American was estimated at $ 2.7 million.
The spread in the cost of living of Americans is really large and starts, as a rule, from 500 thousand dollars, reaching tens of millions, if a person earned such an amount of money during his lifetime. Today, the methodology for calculating the price of “life and death” is complex and takes into account factors such as age, education, employment and annual income.
The amount of compensation from the US budget to the families of the victims of the 9/11 attacks was calculated on the basis of precisely these indicators and the so-called “growth rate” – a potential increase in his income as a result of career advancement determined by economists. Relatives of Americans who died in a terrorist attack on the United States nearly ten years ago received between $ 250,000 and $ 7 million.