Hobson Answers Your Money Questions
Mellody Hobson answers your questions about what to do with your money.
Sept. 19, 2008— -- Susan, from Tamaqua, Pa., asked: My husband and I have life insurance policies with AIG. Should we keep on holding them or cash them in? If we would cash them in, I would not know a safe place to invest the money. My husband feels we should cash them in now while there is still money instead of losing everything that we have put into them over the last 30+ years. I feel we are better to see what happens next. What do you think?
Hobson answered: Hi Susan, if you have a personal insurance policy with AIG (and many do -- as AIG is a leading U.S. provider of property and casualty insurance in more than 130 countries) you are still covered. The problems occurred at the corporate level and most policies are with separate, related companies managed at a state level. Your policy is protected by the state insurance commission and ultimately by local state guaranty funds.
Cheri McPhee, from Berkeley, Ill., asked: What happens to my checking, savings and mortgage accounts if my bank, WaMu, goes under?
Hobson answered: Hello Cheri, your accounts in WaMu are protected by the Federal Deposit Insurance Corporation. The basic FDIC coverage insures $100,000 per depositor per bank and up to $250,000 for some retirement accounts. So, it is safe to say if your money is in one of 8,494 FDICc-insured banks (like WaMu), it is in safekeeping. If this is going to keep you up at night, you can always elect to spread your accounts across other FDIC-insured banks. Whatever you decide to do, keep your money in the bank and not under you mattress! In 75 years, no depositor in an FDIC-insured bank has ever lost a penny of insured deposits. There's every reason to have faith and trust in our banking system, which is the bedrock of our financial system.
Joycelyn, from Fort Worth, Texas, asked: Hi Mellody, I always watch you on GMA. Just wanted to know if I continue to see my 401K shrink because of the turmoil, will it just be better to keep contributing to it to get my company's matching offer, but put it in cash? Not sure what to do and I hate to see the amount keep falling day after day.
