Help! My policy's with AIG

Some of you have asked Gerri about difficult choices regarding credit card debt, 401(k) contributions and insurance with AIG. Here are her answers.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Gerri Willis, CNN personal finance editor

home_rich_cover.03.jpg
For more information on managing your largest investment, check out Gerri Willis' 'Home Rich,' now in bookstores.

NEW YORK (CNNMoney.com) -- Question 1. If you have no credit card debt and have closed your credit card accounts, how can this hurt your credit score? - Nathan

First, how long you've used your cards accounts for about 15% of your FICO score. The longer history you have managing a card, the better your score will be.

Secondly, your FICO score also calculates how much credit you have in relation to your debt. By closing a card, you wipe away some of that available credit and that makes your debt look bigger - if you do carry debt at some point.

Some issuers are even closing down your credit cards if you don't use them often enough. So be sure to spread around your purchases on different cards so you avoid this situation.

Question 2. My company just announced they are suspending their 401(k) contribution. Because of this and the current economic situation, should I stop contributing to my 401K? I have only been in for two years and have about $9,000 in it. - Tom

Just because your employer cut your match, you should still contribute to your 401(k) if you can.

Remember, your contributions are still tax-advantaged and if you have at least ten or more years until you retire, the stock market is a good place to be.

Stocks returned no less than 7.2% and as much as 15.6% annually in the decade following a long-term decline. That's according to money management firm Leuthold Group.

Question 3. If AIG does go out of business, what would happen to our life insurance policy? I would like to let AIG know how unhappy I am with their business practices. But I understand that the person opening the mail with my premium and cranky note won't really care, and can't really do anything. - Mary

Well, you're thinking is on the money. But as far as the safety of your life insurance policies are concerned, you shouldn't be worried. That's because if AIG sold off its units, insurance policies would be picked up by the company that buys it.

In addition, insurance policies would be covered by state guaranty associations.

Plus, if you switch out of AIG, you could be on the hook for cancellation penalties. And when you go to get a new life insurance policy, the rates could be higher since you're older now than when you first got your policy. To top of page

Gerri's Mailbox: Got questions about your money? We want to hear them! Send an e-mail,we'll answer questions on CNN, Headline News and CNNMoney.com.
Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.