Debt tied to foreign governments limited for life insurance companies

Nov 29, 2010

Life insurance companies' exposure to foreign debt is limited, according to a recent report.

Life insurance companies may make investments in order to improve their performance while also helping out their customers.

Included in those investments may be debts they own that are tied to foreign governments. Given the problems some countries have had with the money they owe - take Greece, for example - some people who own life insurance policies may worry that their companies are facing too much exposure.

However, most consumers can set those fears aside. A report from Fitch Ratings said that life insurance companies' exposure to foreign governments' debt is limited.

"Further, and more to the point, Fitch believes that the industry's loss exposure to these investments is immaterial in relation to the industry’s capital or earnings," the company said in its report.

While companies may invest in foreign markets, consumers may choose to place some of their funds with a life insurance company in the form of an annuity. Doing so can help create additional capital people can use during their later years.

However, there is more than one type of annuity, which is why consumers may want to consider their financial situations before delving into investing in a particular product.

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