Do You Need Municipal Bond Insurance?

Bond Insurance in San Diego County

The purpose of a municipal bond insurance policy is to issue a timely payment of the interest and principal due on a municipal bond, which is helpful in case the bond issuer is unable to do so and defaults. Bond investors who are considering municipal bond insurance should be aware of a few advantages of having such a policy, and American Tri-Star Insurance in San Diego is here to share some of those benefits with you.

  • Municipal bonds rely on the projects they finance to bring in anticipated revenues. If the projects fail to produce the desired results, the revenue is lost. Having insurance on these bonds allows for the prompt issuance of payments. Therefore, principal and interest on the bonds are guaranteed regardless of the bond issuer’s circumstances.
  • Insured municipal bonds have a very low risk and are conservative, making them a good long-term investment option. They also have a high level of liquidity and are easier to sell on the market, so even the most discriminating investors should consider purchasing them.
  • Insured municipal bonds have higher yields as a result of a better market price and a higher bond credit rating. If the credit rating for the insurance agency is higher than that of the bond issuer, then the bond will have the same credit rating as the insurance agency, not the issuer. Financial services such as Moody’s, Standard & Poor’s, Fitch IBCA, and Duff & Phelps determine these bond credit ratings.
  • Insured municipal bonds are exempt from federal taxes and may possibly be exempt from state taxes as well if the bondholder lives in the same state as the bond issuer.

Investors should determine their risk tolerance levels when reviewing their portfolios and should decide if the extra protection gained from purchasing San Diego bond insurance is a suitable option for meeting their financial goals.

For answers to any further questions on bond insurance, don’t hesitate to get in touch with the insurance experts at American Tri-Star. If you are looking for additional insurance quotes, our agents can also help with finding the right homeowners and health insurance for you, and can provide a free quote for cheap San Diego auto insurance. Give us a call today at 619-272-2100.