Tuesday, February 3, 2009

AIG - what about Canada?

American Insurance Group was among the first companies, asking for government help in the USA. It's shares plunged to historical minimals and this huge insurance company (with history dating back to 1919) was fighting for life.
Canadian clients may know AIG Life of Canada - many of them put their money in it. Due to big loss of confidence, AIG LoC sales have plunged in last months. Are there any reasons to concern?

No - AIG Life of Canada doesn't carry bigger risk than any other Canadian life insurance company. 

For some reasons:

1.AIG Life of Canada was sold to Bank of Montral few weeks ago. Bank of Montreal holds more than $400 billion of assets and represents a very respectable partner.

2. Canadian branch hasn't been financially connected to its American mother. Operations with sub-prime mortgages, which caused the main troubles were not important for Canadian AIG.

3. AIG LoC is member of Assuris, which provides protection for all policy holders. Policies below $200000 are 100% covered, those over this limit are 85% covered. Other kinds of insurance (like disability insurance or long term care) are secured too.

As an independent broker I have no interest on promoting any insurance company, but I ma trying to save your money. Cancelling AIG policy can you cause both direct (cancelling penalty) and (even more serious) indirect costs (changed health conditions, age, new suicide and incontestability periods, lost tax benefit...). So before you do, try to think about the real pros and cons of this step.