Switching from AIG insurance unnecessary, maybe costly
Wednesday, September 24, 2008
COLUMBUS — Ohioans with American International Group (AIG) insurance should not jump to change policies, Ohio Department of Insurance director Mary Jo Hudson said. Not only do AIG's insurance companies have ample assets for paying claims, she said, but switching policies may have hidden costs.
"Replacing or liquidating a life insurance policy or an annuity can have heavy hidden costs and tax consequences," Hudson said. "There may be a cancellation penalty if you cancel your automobile or homeowners policy."
Last week's $85 billion federal bailout of AIG's parent company has led to some reports of brokers' urging people to replace their AIG insurance policies because it may not be able to pay claims, which Hudson said is against the law. Questions about AIG insurance can be answered at the ODI consumer hotline at (800) 686-1526 or www.ohioinsurance.gov
AIG's troubled noninsurance parent company is not subject to state regulations, Hudson explained, and so is not held to the same investment, accounting and capital adequacy standards as its state-regulated insurance subsidiaries.
