Is my money safe with life insurance companies?
I have a few clients who have questioned how safe their cash value in their life insurance policies or annuities. Some have stated “is my life insurance cash value as secure as money in the bank?”
When it comes to protecting your family’s financial future, choosing between banks and mutual life insurance companies is not apples to apples —but maybe oranges to grapefruits.
Life insurance isn’t a savings account, however it can be a place to store your money that grows with guarantees and offers a similar form of long-term financial security. Let's compare the financial soundness money in the bank with the backing of the FDIC with two leading mutual life insurers like MassMutual and Guardian Life to show why life insurance companies may offer more stability.
FDIC vs. Mutual Life Insurers: A Quick Breakdown
The FDIC insures bank deposits, but its financial standing raises concerns. As of 2023/2024, the FDIC has:
Total Assets: $84.6 billion
Total Liabilities (Insured Deposits): $10.7 trillion
Capital-to-Liabilities Ratio: 1.2%
In comparison, these two top rates mutual life insurers maintain much stronger reserves:
MassMutual (2023):
Total Liabilities (In-force Insurance): $1 trillion
Capital-to-Liabilities Ratio: 3.45% (Based on total adjusted capital of $34.5 billion)
Guardian Life (2023):
Total Liabilities (In-force Insurance): $700 billion
Capital-to-Liabilities Ratio: 1.3% (Based on surplus of $9.1 billion)
Even in a worst-case scenario, where every policyholder makes a claim, these insurers maintain solid ratios: MassMutual at 3.45% and Guardian Life at 1.3%. These companies also have additional safeguards, like reinsurance and state guaranty funds, ensuring even more protection for policyholders.
Are top rated mutual life insurers a safer risk than banks?
If banks fail and were really concerned about the the financial soundness of the FDIC’s ability to cover its debts, we’ve got bigger issues. I share this data just to provide more clarity on the financial wellbeing of top rated mutual companies like Guardian and MassMutual.