At least I think he is, and the sky is still firmly planted where it belongs last I checked. Don't get me wrong, the events of the last few days are serious, and we all need to be paying attention to the market, but let's also maintain a little perspective. What do I mean by that? Consider the following:

Insurance companies are being downgraded across the board. The reason for this is rather straightforward - many of their investment holdings have taken a dip in quality courtesy of our federal government. Sounds bad, right? Of course it sounds bad! The reality, however, is that nothing else about that company has changed. The management is still in place, they are still maintaining the reserves required by law, and they are still receiving premium dollars from both new sales and in force contracts. Sounds an awful lot like status quo to me.

The strength of Insurance Company A relative to its peers after the downgrades are complete is probably not all that different. The reality for the carriers at the top of the rankings is that they are probably going to be just fine. There may be decreased dividend performance and crediting rates or increased rates for new sales as a result of this, but the tax free rate of return on the death benefit is still going to be attractive. Death claims will still be paid, just as they always have been. I would certainly be paying close attention if I bought a policy from a less than top rated carrier. Why? Read on.

What about the consumer? What should they be doing? Maybe nothing. If a policy, even with non-guaranteed elements, was funded and managed correctly during its lifetime, it should be able to weather this storm just fine. Policy Owners need to keep an eye out for changes declared by their insurance company that impact their policy and react accordingly. They should already be doing this anyway. If, however, the policy has been mismanaged and underfunded, I submit it was already a problem and the policy owner simply did not know! I would be particularly vigilant if my carrier were not top tier.

Another thing the consumer should do is keep the issues of the parent separate from the insurance company. Much of the press about a company may be focused strictly on the publicly traded holding company rather than the actual insurance operation (this was very common back in 2008). Know the difference. What may make the holding company a bad investment choice in the eyes of the market may have little impact on policy performance. If that is the case, then should it be a major factor in the decision making process regarding a new or in force life insurance contract? Only you and your client can decide.

So who is left to talk about in this transaction? The agent. What do we need to do with all of this? Maybe nothing aside from reassuring your client that everything is going to be OK. If, however, your practice has been based on aggressive assumptions and minimum funding, you may have a bit of a problem on your hands. In addition, this is yet another example of when aspects of the sale other than price start to matter - when things do not go according to plan. The last thing a policy owner wants is to feel uncertain about their insurance. If your carrier drops from the first or second rating to the second or third you are probably still feeling pretty good. If, however, it is a drop from the fourth or fifth rating to the fifth or sixth, maybe you start to sweat a little bit?

Let's get to work if your clients are starting to perspire.