The Financial Crisis and You

Life insurance policies are covered by each state's guaranty association. The amount of coverage you get if the company fails varies from state to state, but typically, you will be able to recoup up to $300,000 in life insurance death benefits, $100,000 in cash surrender or withdrawal value for life insurance, and $100,000 in withdrawal and cash values for annuities.

Keep in mind that AIG is a holding company for multiple insurers, and many of those subsidiaries are well-capitalized and can cover the policies without the state guaranty association's help, the advisers said. "While the parent company has issues at this point, most of the smaller parts that make up the company are fine and will be sold off to other companies," said Brian T. Jones, vice president of CJM Wealth Advisers in Fairfax. "And anyone who has owned insurance long enough remembers that companies buy companies in the life insurance realm. Happens all the time."

To Buy or Not to Buy

Eve Applebaum, 45, and her boyfriend, Scott Dominick, 31, thought they had found the perfect place: a new, two-bedroom, two-bathroom condominium in a dog-friendly, amenities-filled building in Brooklyn.

After some negotiations, they got the condo and a parking space for $520,000.

All seemed to be moving along until last week, when Wall Street and Washington went into a frenzy over failed investment banks, failed mortgages and failed economic policies.

Now Applebaum and Dominick are unsure whether it's the right time to buy a property. Family members have called to ask them whether they can truly afford it.

"One minute I'm confident. The next, my folks are freaking me out about how the Depression is coming and we're going to lose everything," said Applebaum, a social worker. "I mean, what happens if said Depression occurs and we all lose our jobs and we can't pay our mortgage and then nobody can bail us out?"

They can close the deal on the condo as soon as they want to. But Applebaum is "riddled with fear about this market." Dominick, a technician who does post-production work on films, is also confused.

Neither is saddled with debt, but they are not among the super-wealthy of New York by any means. While their jobs are stable for now, Dominick does not know whether his industry will take a hit at some point.

"A job loss between the two of us would be disastrous," Dominick said. "This is where my hesitance to buy now lies. On the other hand, one has to keep in mind that a job loss can happen at any time, good economy or not."

What should they do?

First, several advisers said, they need to assess their personal financial situations, recession or depression or not. If they don't have the money for a decent down payment that would keep the monthly mortgage reasonable, then they shouldn't do it. If their mortgage payments would take up a substantial chunk of their monthly income, to the point where they would be stretching to pay other bills, then they shouldn't do it. What they should do is steer clear of adjustable-rate mortgages that will balloon in a few years, the advisers said.