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The American free enterprise system has proven to be the most resilient and efficient means of getting consumers the goods and services that they want. But—as we have all learned—free markets aren’t ever risk-free. Even well-established companies can fail during an economic downturn, or even when the business climate looks favorable.

Insurance companies are no exception to this rule.

An insurance company may be forced into bankruptcy when its debts outstrip its assets, just as any other business. However, the collapse of a life insurance firm can inflict disastrous harm to a community, or even to a whole state. People use their life insurance accounts as investments or as cushions for end-of-life expenses, so when an insurer goes out of business, policyholders are faced with potential financial ruin.Read the full article.