Richard Fine woke up Thursday morning, sat down to write a check to his insurance company, Genworth Financial, and while listening to the news realized the very company to which he was about to send his money was asking the federal government for a bailout.
"I didn't expect to see my insurance company seeking a bailout. I didn't think insurance companies could fall prey to the same problems as the banks, but I guess we all should have known better after AIG," said Fine, 62, a business owner from Ridgewood, N.J.
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The Treasury Department announced this week that Genworth, along with some of the country's largest insurers -- Hartford Financial Services Group, Lincoln National Corp, Prudential and Aegon -- would receive assistance through the Troubled Asset Relief Program, the same emergency fund established last year to bail out ailing banks.
Life insurance companies are increasingly in trouble. Their ratings and stock prices have fallen precipitously in recent weeks.
The federal government, the insurance companies, and the state guaranty associations, which serve as safety nets in case an insurance company fails, insist no one should be worried. But for millions of Americans who depend on insurance to take care of their families in case they die, or rely on money they receive from annuities, news of the bailout has them concerned.
"Yes, I'm concerned. Life insurance and long-term care insurance protect you against something going wrong in the future. Long-term care can drain a family's savings. I have a wife and two kids in college and I would just as soon not drain what's left of our equity if I ended up in a hospital," Fine said.
Intervention, the government and the insurers say, is not a bailout for failing companies -- comparable to the assistance banks received last year -- but the newest tool in an arsenal intended to keep the insurers solvent and policy holders protected.
