For policyholders who hold life insurance with AIG subsidiaries, it's been a waiting game since AIG, a holding company for its life insurance subsidiaries, announced it was on the verge of bankruptcy.

Now policyholders know that they will soon have a new life insurer: On Oct. 3, 2008, AIG said it intends to "refocus the company on its core property and casualty insurance businesses." That puts the "For Sale" sign on its American life insurance subsidiaries, including American General, American Life and SunAmerica (see sidebar for more AIG subsidiaries).

Fortunately, life insurance policyholders need only sit back and relax. First, your life insurer has not been the subject of AIG's bankruptcy talks. Financial troubles are isolated at the holding company level, which is regulated by the federal government. The life insurance subsidiaries, on the other hand, are regulated by the states and, by all accounts, are financially strong.

You will likely get a letter announcing the new owner of your policy in the future, but you will experience no change in your insurance coverage. Life insurance is, after all, a contract, and the new owner of that contract can't change the terms. That means all the benefits, terms and premiums you signed up for will not change.

Steven Brostoff, spokesperson for the American Council of Life Insurers, adds, "The contracts continue. The obligation is with a different life insurer."

In addition, those with pending applications with an AIG life insurance company should experience no interruption in service.

Down the road, policyholders may see offers of new insurance products, says Weisbart.

Owners of variable life insurance policies that were originally purchased from an AIG company may get new investment options and "the investment manager of those funds could well change, " says Weisbart. "I wouldn’t be surprised if there was some combining of funds of variable annuities or variable life that AIG offered with funds that exist in the buyer’s portfolio, for economies-of-scale purposes."

Weisbart cautions that a change of company ownership does not mean you should consider replacing your life insurance policy with a policy from someone else. Any time you consider changing life insurance policies, keep in mind that you will need to go through the medical underwriting process again and could face higher rates simply because you've gotten older.

If you've developed a good working relationship with an AIG agent, that person will likely continue in that role for the new owner. Jeff Taggart, the immediate past president of the National Association of Insurance and Financial Advisors, and himself a licensed AIG agent, expects that most AIG agents will move to the new owner.

"It’s a company decision whether contracts are offered to all agents," he says. Agents will need to make individual decisions on whether to become agents of the new insurer, and will have to fill out paperwork to do so, but "I assume the agent would choose to develop a relationship that would allow them to service their professional relationships," says Taggart.