Your life insurance company just got sold off — here’s what that means for your policy

Most people can expect minimal changes to their coverage, but there are protections in place if your new provider doesn’t keep its promises.

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Amanda Shih

Amanda Shih

Editor & Licensed Insurance Expert

Amanda Shih is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Her work has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

Published November 3, 2021|3 min read

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A small number of major insurance companies have recently sold off their individual life insurance business — the part of their company that serves the average person buying a personal policy. 

Principal Financial stopped offering life insurance policies in September 2021 (though it will honor existing policies), while companies like Voya and Allstate have stopped offering coverage and passed existing policies on to other insurers.

Industry experts and wealth advisors say there’s nothing to fear if you unexpectedly find your life insurance policy is going to be transferred to a new provider. But, there are some ways to ensure your coverage is safe for the long haul.

What happens to your policy after a sale?

You shouldn’t experience any major differences when working with your new insurer, and your benefits are guaranteed, even if your policy changes hands.

Though it may be a surprising change for the average person, these types of sales are common. 

“The transfer of books of business — whether involving life insurance policies or annuity contracts — is not new at all,” says Jack Dolan, ACLI spokesman. “Many people today are receiving benefits on policies and contracts that were not issued by the life insurer providing these benefits.” 

There are protections if your new insurer doesn’t deliver

“A wide array of consumer protections are in place to make sure that life insurers can indeed fulfill their obligations,” says Dolan. “The transfer of policies from one life insurer to another is carefully overseen by state regulators.”

In the rare event that an insurance company doesn’t fulfill your contract terms, you can file a complaint with your state’s insurance commissioner. Even if your insurance company goes bankrupt, your state’s insurance guaranty association can help transfer your policy to a financially healthy insurer or pay out a policy claim (up to around $300,000, though the number varies). States require insurers to join a guaranty association to do business locally. 

If you’re using your life insurance to invest, there’s already some investment risk baked into your policy’s cash value regardless of your provider. But, if you carefully chose your insurer based on their investing profile, changing companies can be disconcerting. However, a policy transfer shouldn’t increase the risk of your investments, even if it’s to a non-traditional insurer — like a private equity firm. 

“Private equity firms could be much better at predicting and assessing risk than traditional insurance companies, which are known to be very risk averse by nature,” says Malcolm Ethridge, executive vice president and financial advisor at CIC Wealth. 

How to prepare for a provider change

Even though state regulators have broader protections in place, you should do your own due diligence. 

Both Ethridge and Dolan recommend keeping any letters or emails you get about the company’s sale. The letters should outline what you can expect from your new provider and any assurances around honoring your existing contract. 

It’s also worth researching your new company. “It could matter if the acquiring company has a history of poor customer service,” says Ethridge. 

Several factors impact your experience with a life insurance company, but trusted ratings agencies can help your research. Check a provider’s A.M. Best rating for financial stability and its Better Business Bureau or J.D. Power rankings for customer satisfaction details. 

If you’re unhappy with your new provider, you might consider buying a new policy with another insurance company. However, your rates will likely be higher than your current policy.

Most people buy life insurance to get trustworthy protection for their family, so an unexpected change in your provider can feel worrisome. However, state regulations mean that you can rest assured that your insurance policy will be honored, regardless of which company owns it.

Image: Aleksandar Nakic / Getty Images