Life and Health Insurance Guaranty Association
What is the purpose of an Insurance Guaranty Association?
to protect policyholders and claimants when an insurance company becomes insolvent.
What is the association's liability for health benefit plans?
$500,000
The association provides coverage for: (three bullet points)
- individual life, health, annuity, and supplement policies - certificates under group policies and contracts - unallocated annuity contracts issued by member insurers
Do all insurers have to be members of the association?
Yes
The association's liability is limited to what?
the amount of the insurer's contractual obligations or amounts specified by law, whichever is less.
The association's liability is limited to the lesser of the insurer's contractual obligations (if it did not become impaired or insolvent) or $____________ in benefits, in the case of life insurance policies.
$300,000
Insurers or producers must give applicants a ______ _______ stating that the association may not cover the policy, that coverage may be limited, and that the applicant should not rely on the association's guarantees when selecting an insurer.
disclosure notice
The North Carolina Life and Health Insurance Guaranty Association protects policyowners, insureds, and beneficiaries of life insurance policies, health insurance policies, and annuity contracts if an insurer fails to perform what?
if an insurer fails to perform its contractual obligations because it becomes impaired or insolvent.
An insurer or producer can or cannot use the existence of the Guaranty Association to advertise, sell, or induce the purchase of insurance?
Cannot use
Jack's beneficiaries were unable to collect the $250,000 in proceeds under his life insurance policy because of the insurer's insolvency. What amount will his beneficiaries typically be able to collect if the policy is covered by the Life and Health Insurance Guaranty Association? $100,000 $200,000 $250,000 $300,000
$250,000 - The association's liability is limited to the lesser of the insurer's contractual obligations (if it did not become impaired or insolvent) or $300,000 in benefits, in the case of life insurance policies.
What is the association's liability for benefits for a payee or beneficiary of a structured settlement, annuity, including cash values?
$1 million
Insurers and producers may or may not use the existence of the North Carolina Life and Health Insurance Guaranty Association, or the protections the association offers, for the purpose of selling insurance?
may NOT use
Zelda, a producer selling health insurance, assures a prospective applicant that the insurance company she represents is backed by the protections of the North Carolina Life and Health Insurance Guaranty Association. Which of the following statements is correct regarding this kind of assurance? It is recommended when selling health insurance. It is required when selling to Medicare-eligible individuals. It is highly regulated by the Insurance Department. It is prohibited at all times.
It is prohibited at all times.
Members are assessed fees each year to help carry out the association's powers and duties. The association maintains what two accounts for this purpose?
1. a life insurance and annuity account 2. a health insurance account
All the following statements regarding the North Carolina Life and Health Insurance Guaranty Association are correct EXCEPT: An agent may use the existence of the Guaranty Association to assure a claimant that his policy will be protected even if the insurer becomes insolvent. The purpose of the Insurance Guaranty Association is to protect policyholders when an insurance company becomes insolvent. Benefits paid to claimants and policyholders are subject to limits. All insurance companies licensed to sell insurance in North Carolina must be members of the North Carolina Life and Health Insurance Guaranty Association.
An agent may use the existence of the Guaranty Association to assure a claimant that his policy will be protected even if the insurer becomes insolvent. - Insurance producers and companies may not use the existence of the guaranty association to sell, solicit, or induce the purchase insurance covered by the association.