Should the insurance company become bankrupt (which has never happened in Liechtenstein or Switzerland in over 150 years, unlike Australia) the insurance policy's assets can not be used to meet the insurance company's financial obligations. Should the unlikely event occur that a Swiss or Liechtenstein insurance company becomes bankrupt, the underlying policy assets are segregated from the asset of the insurance company.
This means that the assets of the policy can only be used to meet the obligations of the policy. In both Switzerland and Liechtenstein there are specific laws that afford the above protection of an annuity policy’s assets in the event of an insurance company’s bankruptcy.
In Switzerland it is the Federal Law on Securing Life Insurance Benefits (also known as SALV – Bundesgesetz über die Sicherstellung von Ansprüchen aus Lebensversicherungen). Liechtenstein would treat a bankrupt insurance company as a special case under the Liechtenstein Bankruptcy Law (Liechtensteinische Konkursordnung or KO).