The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing


Subject:  Re: S&P500 distribution of returns Date:  9/21/2013  5:15 PM
Author:  CCinOC Number:  73139 of 88772

You think an insurance company guarantee will be solid if we have another Great Depression?

Even during the Depression, insurance companies thrived.

These Companies Never Heard of the Depression

But the recession has been selective, not universal. An examination of the record discloses certain industries and certain outstanding corporations in other industries which have withstood the forces of business reaction. [...] An investment broker has published a list of important companies which showed increased earnings for the first half of 1930 as compared with the abnormally prosperous first half of 1929.

Indeed, life insurance companies helped bail out bank and the government during the Great Depression.

The economic challenges that we face in today's world have become second only to the great depression. The recent collapses of banks and large corporations in our country have made people scramble for a place that has security. We are asked often, "Where can we place assets that provide safety and security in uncertain times"? One place that should be considered is life insurance companies that have a Legal Reserve classification.

Life companies that comply with the legal reserve requirements established by the state insurance laws are known as Legal Reserve Life Insurance Companies. Legal Reserve companies had their strongest showing of strength during the Great Depression of 1929-38 when some 9,000 banks suspended operations while 99% of all life insurance in force continued unaffected. Many people are not aware that it was not the government that bailed out the banking industry during the Great Depression; it was the U.S. insurance companies. Reinsurance, acquisitions, and mergers protected virtually all policy owners in the affected companies against personal loss. While thousands of banks closed across the United States, the insurance companies remained in force and continue to this very day. In a financial collapse, the insurance companies would be second only to the U.S. government to fold. This is true because the government has taxing power, and can print money. While there is no way of determining the total amount of capitalization of all of these combined legal reserve companies; I would venture to say that no other sector of the economy even comes close.
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us