On March 4th, I wrote the article ?First the Mortgage Crisis, Now the Life Insurance Crisis?? to help illustrate the possibility of an upcoming life insurance crisis.? Less than two weeks later, the Wall Street Journal reported the same possibilities.? Throughout the month of March, most insurance stocks trended higher with spectacular gains.? The three companies that I mentioned in the original life insurance crisis article were up 75%, 107% and 160% respectively.

Principal Financial Group – March 9th – 5.88 – March 27th – 10.30 – 75% gain
Lincoln National Corp – March 9th – 5.01 – March 27th – 10.37 – 107% gain
Hartford Financial Services – March 9th – 3.63 – March 27th 9.41 – 160% gain

Today Lincoln National Corp filed with the SEC that they will not seek to issue debt under a FDIC program that helps banks and financial institutions to access debt at a reasonable rate.? At first, this sounds very positive for the company until we find out why Lincoln National Corp is not seeking assistance.? The company?s investment manager said he didn?t feel the company would qualify to participate under the current provisions.

With this statement, Lincoln National Corp is down over 33% and is bringing the entire life insurance sector with them.? Principal financial is down 18% and Hartford Financial is lower by 9% on the day.? Lincoln Financial is not the largest life insurer by market capitalization, but if one major insurer goes under, several more are headed in the same direction.? Many of the life insurance corporations have seen 75% or more declines in their stock prices since the beginning of 2009.? It looks like there are more problems ahead for these companies.

Fortunately, life insurance policies are guaranteed up to $100,000.? Unfortunately, if you have a policy higher than that, you could lose a great deal of your insurance policy if the life insurer that covers you goes under.? It is likely that the government will try to prop up some of the bigger insurers, but as you can see from Lincoln Financial, all of them will not receive government assistance.