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You purchased life insurance to protect the ones you love, but given the cost of coverage and stakes involved, it is well within your right to ask: Who’s protecting you?
Indeed, consumers spent about $17.5 billion in new annualized premiums in 2025, according to the industry group LIMRA.
All expect that the company they entrusted with their family’s financial well-being will make good on their commitment, but few take steps before they buy to protect their own interests. It is important to understand the regulatory framework within which companies operate in order to know what recourse there is should things go awry.
“Any time a consumer makes this type of purchase, or engages in a financial commitment, it is essential that they do their research and understand what they’re buying,” said Ira Rheingold, executive director of the National Association of Consumer Advocates, a Washington, D.C.-based nonprofit.
Who regulates the life insurance industry?
The Insurance Information Institute (III) notes that the same guarantees that exist for bank accounts by the Federal Deposit Insurance Corp. do not exist for life insurance policyholders, but there are numerous other safeguards in place. 1
The life insurance industry is regulated on the state level. State insurance departments maintain strict oversight and verify independently that life insurance companies have the resources to meet their financial obligations. The National Association of Insurance Commissioners (NAIC), which is comprised of chief insurance regulators from all 50 states, the District of Columbia and five U.S. territories, sets best practice standards and provides regulatory support for the industry with the goal of helping to inform and protect consumer interests. According to the Insurance Information Institute, state laws differ but they all protect policyowners in several key ways:
- Licensing: Insurance agents and brokers must be licensed to sell insurance in the states where they do business. Those that fail to comply with various state laws and regulations governing their activities are subject to fines and license suspension or revocation. They must also participate in continuing education programs to ensure professional standards.2
- Product Regulation: State regulators review and monitor the products sold by life insurers, including term life, permanent life, and other products such as annuities. While premiums and rates for life insurance and annuity products are not typically subject to regulatory approval, they may be monitored to ensure the benefits provided are commensurate with premium charges.
- Solvency and Guaranty Funds: Through the NAIC, state regulators monitor the financial health of the companies licensed to provide insurance in their state through an analysis of the financial statements they are required to file and periodic onsite examinations, III reports on its website. When a company is found to be financially unstable, the state insurance department “takes control of the company.” If an insurer must be liquidated or is unable to meet its financial obligations, each state has a guaranty mechanism to help pay the covered insurance obligations of those insurers licensed in the state. To learn more about a state’s specific guaranty association and what it covers, you can visit the website for the National Organization of Life & Health Insurance Guaranty Associations.3
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How consumers can protect themselves
Consumers can take steps, too, to protect their own interests when purchasing life insurance.
For starters, Rheingold suggests contacting your state insurance department to find out if the company you are considering buying coverage from, is, indeed, licensed in your state — before you buy.
Ask, too, whether it has many consumer complaints filed against it relative to the number of policies it sold, the III suggests.
Look to companies that have an established reputation and a history of meeting their financial obligation, said Rheingold. “You want a company that has been around for a while,” he said.
Whether you opt for term life insurance, which provides coverage for a fixed number of years, or permanent life insurance, like whole or universal, that provides a death benefit for life so long as the premiums are paid, be aware that life insurance is a long-term commitment.
Thus, policyholders should choose an insurer they can trust to remain financially sound for many years to come, the III indicates on its website. One way to do that is to research the company’s financial stability with the four major credit rating agencies: A.M. Best, Fitch Ratings, Moody’s Investor Service and Standard & Poor’s. (Check MassMutual’s financial strength and ratings here)
Take note that each rating agency has its own rating scale, and they don’t always align when it comes to scoring an insurance company’s underlying strength. For that reason, the III recommends consumers consider ratings from two or more agencies before they commit.4
The NAIC also has online tools to help consumers research whether an insurance company has any enforcement actions against it, and download financial data and market conduct examination reports.
Roughly 51 percent of American adults own some form of life insurance, either an individual policy or a group policy (or both), and all have a vested interest in securing coverage from a reputable company.5 The state regulatory framework and guaranty funds help protect policyholders, but consumer vigilance is also critical.
“Educate yourself about life insurance,” said Rheingold. “Think about the purpose of coverage, which is to protect your family if you were no longer with them, and determine how much you need, what kind you need and whether you need it at all.”
Frequently asked questions about how the life insurance industry is regulated
Q: Who regulates the life insurance industry in the United States?
A: Life insurance in the United States is regulated at the state level. Every state has its own insurance department that licenses carriers, monitors financial health, reviews products, and handles consumer complaints. The National Association of Insurance Commissioners (NAIC) — made up of chief insurance regulators from all 50 states, the District of Columbia, and five U.S. territories — sets best practices and model regulations to help standardize oversight across the country. At the federal level, the Federal Insurance Office (FIO), housed within the U.S. Department of the Treasury, monitors the industry but does not have direct regulatory authority over insurers.
Q: What is the NAIC and what does it do?
A: The National Association of Insurance Commissioners (NAIC) is a nonprofit, nonpartisan organization founded in 1871 that coordinates insurance regulation across the United States. It develops model laws and regulations that states can adopt, monitors the financial solvency of insurers, provides consumer protection resources, and offers online tools that let you research whether an insurer has enforcement actions against it or check its financial data. The NAIC does not directly regulate insurers — that power rests with each individual state — but its standards form the backbone of the national regulatory framework .
Q: What happens to my life insurance policy if my insurer goes bankrupt?
A: If your insurer becomes financially insolvent, your state's guaranty fund is designed to protect you. Every state, the District of Columbia, and Puerto Rico has a life and health insurance guaranty association that helps cover the policy obligations of failed insurers licensed in that state. The exact coverage limits vary by state. Before you buy, it pays to check an insurer's financial strength ratings from agencies like A.M. Best, Fitch, Moody's, and Standard & Poor's to reduce that risk in the first place
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This story was published in July 2019. It has been updated.
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1 Insurance Information Institute, “How Do I Pick a Life Insurance Company?"
2 Insurance Information Institute, “Commercial Insurance – Regulation,” 2026.
3 National Organization of Life and Health Insurance Guaranty Association, “The Nation’s Safety Net,” 2024 -2025.
4 Insurance Information Institute, “How to Assess the Financial Strength of an Insurance Company,” 2026.
5 LIMRA, “2025 Facts About Life Insurance.”
