AIG was not in default on Life Insurance. They were insuring Mortgages. That was their problem. I think you’re reaction is typical and why so mnay people are uninformed abotu thwt to do. Have you tried a mattress? Or better, stay in the stock market.
where IS that spell check?
My point is that insurance bears single company risk. What happens when your insurance company goes bankrupt? Do you lose 100% of the value of your insurance? For example, what of GICs, Term Life, Whole Life, etc. Is their value insured by the Feds in some way?
I prefer explicitly known risk. I have mostly Index funds at Vanguard. I know I risk Vanguard going out of business, but their ability to steal the underlying assets is minimal to non-existent. So, I primarily have Market Risk, a known one that I can control. I can step away from Market Risk by going to CDs, Bonds, MMFs, gold and my checking account.
Insurance purveyors who suppose they are offering an investment, in my experience, are usually A) Frauds, B) Extremely Misleading, or C) Have such convoluted and long-term tax-based advantages that a really smart guy wouldn't dare enter that market without a PhD dissertation to back him up. For example, I have studied Annuities many times over the years, and while they appear to offer some limited marginal tax benefits, their restrictions, costs and opacity always put me off.
As Individual Investors go, I'm quite well studied. I believe in the Efficient Market Hypothesis for most stock investment categories. I know that portfolio allocation and cost minimization are the keys to long term success. I have been recently taught about Black Swans, and am sufficiently chastized that I will slowly take that into account in portfolio construction.
So, thank you very much, I will stay largely in the Stock Market, where my returns have and will continue to exceed (I'm quite sure) virtually any other investment class over my investment time horizon.