Agence France-Presse - 9/18/2008 3:20 AM GMT
Americans who have ploughed their savings into life insurance and annuity-linked pension funds were running scared Wednesday as financial titans collapsed around them.
"We're receiving phone calls that we wouldn't usually get," said Robert Willis, executive director of DC Life and Health Insurance Association, part of the national network that guarantees insurance policies.
"Given what's happening with AIG and Lehman Brothers, people are looking at their life insurance and annuity products and are concerned about these companies going under and what the impact would be on them," he said.
Wall Street icon Lehman Brothers filed for bankruptcy in New York on Monday after suffering massive losses from the subprime crisis of loans to high-risk customers.
The following day, the US Federal Reserve stepped in with an 85-billion-dollar bail-out of American International Group (AIG) after the insurance giant also fell victim to the mortgage subprime lending meltdown.
In a statement issued Tuesday, AIG assured its life insurance clients that their policies were not at risk.
Willis tried to reassure them, too, by explaining how warranties such as those provided by DC Life and Health work.
Most of the guarantees allow the investor to recover his or her initial investment plus any earnings, up to a ceiling of 300,000 dollars in death benefits.
But the ceiling is only applicable once per person. Someone with three separate pension plans, each worth 200,000 dollars, for instance, is protected only to the tune of 300,000 dollars, said Willis.
David Certner, legislative policy director of AARP, a massive group of American over-50s, with more than 40 million members, doubted that the fall-out would affect individual investors.
"I think a lot of individuals will not be directly affected because many consumer-oriented products are highly regulated," he said.
"Of course, that's different from somebody who has investments in those companies or the stock market in general. They're obviously seeing big reductions right now in the value of their stock market holdings."
Meanwhile, confidence among savers was at rock bottom, said economist Ken Goldstein.
"The confidence of the public was in bad shape to begin with; this certainly didn't help," said Goldstein.
"But perhaps because of the crisis, we'll get some demands for change," he added.
"One of the things they clearly will attack is the degree to which the people who put their money with these firms had no clue what was being done with their money. Companies should have to disclose, to a certain extent, what position they are taking," he said.
"We're receiving phone calls that we wouldn't usually get," said Robert Willis, executive director of DC Life and Health Insurance Association, part of the national network that guarantees insurance policies.
"Given what's happening with AIG and Lehman Brothers, people are looking at their life insurance and annuity products and are concerned about these companies going under and what the impact would be on them," he said.
Wall Street icon Lehman Brothers filed for bankruptcy in New York on Monday after suffering massive losses from the subprime crisis of loans to high-risk customers.
The following day, the US Federal Reserve stepped in with an 85-billion-dollar bail-out of American International Group (AIG) after the insurance giant also fell victim to the mortgage subprime lending meltdown.
In a statement issued Tuesday, AIG assured its life insurance clients that their policies were not at risk.
Willis tried to reassure them, too, by explaining how warranties such as those provided by DC Life and Health work.
Most of the guarantees allow the investor to recover his or her initial investment plus any earnings, up to a ceiling of 300,000 dollars in death benefits.
But the ceiling is only applicable once per person. Someone with three separate pension plans, each worth 200,000 dollars, for instance, is protected only to the tune of 300,000 dollars, said Willis.
David Certner, legislative policy director of AARP, a massive group of American over-50s, with more than 40 million members, doubted that the fall-out would affect individual investors.
"I think a lot of individuals will not be directly affected because many consumer-oriented products are highly regulated," he said.
"Of course, that's different from somebody who has investments in those companies or the stock market in general. They're obviously seeing big reductions right now in the value of their stock market holdings."
Meanwhile, confidence among savers was at rock bottom, said economist Ken Goldstein.
"The confidence of the public was in bad shape to begin with; this certainly didn't help," said Goldstein.
"But perhaps because of the crisis, we'll get some demands for change," he added.
"One of the things they clearly will attack is the degree to which the people who put their money with these firms had no clue what was being done with their money. Companies should have to disclose, to a certain extent, what position they are taking," he said.
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