Life And Health Guaranty Association

When an insurance company fails, a guaranty association is an entity which steps into the shoes of the failed insurer for the purpose of providing certain continued benefits and/or resolution of covered claims. However, not all types of insurance policies or claims are covered by guaranty associations.

If an annuity owner is a Florida resident and the insurance company licensed to sell annuities in Florida becomes insolvent, a fixed deferred annuity will be guaranteed by the Florida Life & Health Insurance Guaranty Association (FLHIGA) for up to an aggregate amount of $250,000.

Also, for any one insured life, the Guaranty Association will pay a maximum of $300,000 in life and annuity benefits and $500,000 in health insurance benefits no matter how many policies and contracts there were with the same company, even if they provided different types of coverages.

The maximum amount paid by the FLAHIGA for any one person is: Life Insurance Death Benefit: $300,000 per insured life. Life Insurance Cash Surrender: $100,000 per insured life. Health Insurance Claims: $300,000 per insured life.

If you own an annuity policy, the state guaranty fund for the state where you reside protects your benefits up to set limits. The most common limits are between $250,000 $300,000, but can be as much as $500,000 in select states.

What is an insurance guaranty association? Insurance guaranty associations provide protection to insurance policyholders and beneficiaries of policies issued by an insurance company that has become insolvent and is no longer able to meet its obligations.

Most guaranty funds specify a maximum amount they will pay for any claim. The most common limit is $300,000. The fund will not pay any portion of a claim that exceeds the specified limit. Thus, some policyholders may collect only a portion of the claim payments they are owed.

Funding for the guaranty associations comes from assessments on solvent insurers.The NAIC Life and Health Insurance Guaranty Association Model Act permits life/health insurers to consider the amount reasonably necessary to meet their assessment obligations in the determination of the premiums they charge.

National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) is a voluntary organization of U.S. life and health insurance guaranty associations. Founded in 1983, it covers policyholders when a multistate life or health insurance company fails.