Bernie Madoff allegedly conned wealthy and supposedly sophisticated investors out of $50 billion in a Ponzi scheme. And a number of these investors were insurance companies from around the world.

Amongst some of the affected investors are insurance companies like AxaSA of Paris, Massachusetts Mutual Life Insurance Co. of Springfield, Sumimoto of Japan and Swiss Reinsurance Co., as well as other all-star companies, have also seen the negative effects of Madoff’s big swindle.

We can learn some lessons from this scandal. Kathleen Pender of the San Francisco chronicle laid out what investors can learn from this scandal. 5 of these points apply directly to those interested in investing or getting life insurance:

1) Don’t buy what you don’t understand.

2) If it sounds too good to be true, it probably is.

3) Understand any fees associated with your investment.

4) Know the terms and the company.

5) Don’t just trust someone that you’re getting a good deal; do the research yourself and make an educated decision.

Keep these points in mind when you’re looking for insurance companies and you will soon find the one you need AND want.

I understand the the higher level of risk makes insurance companies unwilling to offer coverage to victims of terrorist attacks, but at the same time I find it deplorable that in a country facing the possibility of more attacks, there is no coverage for victims.

However, the article does offer some hope. Here’s an excerpt:

‘Seema, Senior manager, ICICI Prudential, says that now after so many terrorist attacks the insurance industry is seriously thinking of launching a plan exclusively against acts of terrorism.

“I can say that people are now becoming aware and the constant query about terrorism insurance cover has prompted all of us to give it a thought,” she adds.’

Hmm. Either something’s fishy or that anonymous “official” was talking out of his %**. Go figure.

Swiss Life is just one more indicator that the insurance market continues to dive as it gets harder and harder to maintain the assets these companies have. Smaller insurance agencies like Swiss Life are fighting tooth and nail to hold on to their position but its getting increasingly hard to contend with the bigger life insurance companies. Thus the smaller companies have to become more efficient and streamlined or risk probable ruination.

Check out the full article from Forbes here.