If you’re an AIG policyholder, as I am, the news of the past two days has probably been a bit unsettling. This is a crisis that is playing out minute by minute, and we all need to stay tuned to figure out what the long-term impact will be on the overall financial markets and our own personal financial situations.

Here’s what we can tell you. If you own an AIG life insurance or annuity product, there are protections in place to safeguard your policies. They’re called Insurance Guaranty Associations, and they offer a safety net—-nationwide—-to provide protection to insurance policyholders for their guaranteed contract benefits. All states, the District of Columbia and Puerto Rico have insurance guaranty associations. Insurance companies are required by law to be members of the guaranty association in states in which they are licensed to do business.

The following “Questions & Answers” provide some additional details:

How do Insurance Guaranty Associations work?

When there are insufficient assets in an insolvent insurance company to pay policyholder claims, the Insurance Guaranty Association provides funds by assessing member insurers that write the same kind of business as the insolvent insurer. These assessments are used to pay, up to statutory limits, the covered claims of policyholders of the insolvent company or to provide continued coverage for the policyholder.

What are the statutory limits on covered claims?

The amount of coverage provided by the guaranty association is set by state statute. Although states’ laws differ as to dollar amounts covered by their guaranty associations, nearly all states have enacted a version of the National Association of Insurance Commissioners (NAIC) Model Law, and provide coverage for life, annuity, and health insurance at limits of at least:

There also is an overall cap for any one individual of $300,000.

How are guaranty association activities coordinated when an insolvent company does business in multiple states?

All state guarantee associations are members of the National Association of Life and Health Guaranty Associations (NOLHGA). In the case of an insolvent life insurer that has policyholders in multiple states, the activities of the state guaranty associations involved are coordinated by NOLHGA. NOLHGA provides resources and technical expertise to the state guaranty associations as well as a national forum for discussion of state guaranty association issues.

The bottom line is this: If you own an AIG policy, chances are that you’ll be just fine. Hopefully, AIG will emerge from the current crisis and shore up its capital position over time. Alternatively, it may sell its life and annuity business, in which case you’d be covered by a different carrier. In all likelihood, your policy(ies) will be honored in full, even if the face value or cash values exceed the limits outlined above. Only under the most dire of scenarios would the cap limits be applicable.

So while the news is understandably unsettling, it’s important to recognize that there are protections in place to safeguard your assets.