What happens when a life insurer fails? Clark has addressed this issue before and created some panic among listeners…so he's going to tread gently on the topic again!

First off, there's no FDIC for failing insurance companies. Insurers have historically been regulated at the state level. So each state has its own state guaranty association that handles paying out money to people in the event of an insurer failure.

Most states have coverage levels of somewhere between $100,000 to $300,000 for individual policyholders. NOLHGA.com can help determine the level of protection your state affords.

However, there is one caution about state guaranty associations. The associations will not have enough money on hand to make everyone whole in the event of a failure. So there may be an indeterminate waiting period until you get your money.

But remember, once again, most insurers won't fail.

The greatest warning here is for those buying insurance. Clark recommends only buying from insurers that are rated A++ or A+ by A.M. Best. In addition, you may also want to buy multiple policies instead of just one. That way you can ensure that each policy does not exceed your state's limits.