AIG in Turmoil: Should Policyholders Worry?

I was recently in touch with Timothy Speiss, a partner and practice leader of Eisner's personal wealth advisers' practice. Over E-mail, he passed along the following advice for AIG policyholders:

What does the current turmoil surrounding AIG mean for its policyholders?
Certainly current circumstances are unsettling. However, every state has a guaranty association in place to protect policyholders in the event of an insurer's failure. Insurance companies maintain separate entities for insurance operations and must meet state regulatory and capital requirements to fulfill obligations to policyholders. For life insurance policies every state, plus the District of Columbia and Puerto Rico, runs a guaranty association that requires insurance companies to essentially cover for their competitors. That is, firms have to pay a fee and the amount is based on their market share in any given state, to help ensure any failed institutions' customers are protected. If they don't pay the fee, they risk losing their license in that state. Life insurance policyholders are protected for at least $100,000 in cash surrender or withdrawal value on their policy and at least $300,000 in death benefits.

What should you do if you have an AIG policy?
Speak with your insurance adviser/broker and review the type of insurance product you hold. Review investment features. Review your state's insurance guaranty provisions and the rating agencies' comments regarding the carrier. Consider acquiring coverage through another provider.