guaranty association
DESCRIPTION
You don\'t invest because of SIPC or make a deposit because of FDIC. Similarly; you don\'t purchase insurance because of a guaranty association but its nice to know.TRANSCRIPT
IT’S NOT A REASON TO BUY INSURANCE
DISCLAIMER: IN MOST STATES IT IS A VIOLATION OF THE INSURANCE CODE TO USE THE GUARANTY ASSOCIATION AS AN INDUCEMENT TO BUY A POLICY. GUARANTY ASSOCIATIONS ARE NOT A SELLING POINT FOR AN INSURANCE POLICY.
"UNFAIR MARKETING PRACTICES” NO INSURER OR INSURANCE INTERMEDIARY MAY MAKE USE IN ANY MANNER OF THE PROTECTION GIVEN POLICYHOLDERS BY GUARANTY ASSOCIATION STATUTE AS A REASON FOR BUYING INSURANCE
State Guaranty Association
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STATE GUARANTY ASSOCIATIONS PROVIDE COVERAGE (UP TO THE LIMITS SPELLED OUT BY STATE LAW) FOR POLICYHOLDERS OF INSOLVENT INSURERS LICENSED TO DO BUSINESS IN THE STATE.
WHEN AN INSURER IS DECLARED INSOLVENT THE GUARANTY ASSOCIATION:
1. ANALYZES THE COMMITMENTS TO POLICYHOLDERS. 2. ENSURES THAT COVERED
CLAIMS ARE PAID. 3. MAY ARRANGE FOR COVERED POLICIES TO BE TRANSFERRED TO
ANOTHER INSURER.
What is it?
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NO!
INSURANCE COMPANIES CANNOT GO BANKRUPT SECTION 11 USC 109(B)(2) AND (3) EXEMPTS INSURANCE COMPANIES FROM BANKRUPTCY LAWS.
INSURANCE COMPANIES MAY BECOME INSOLVENT.
So it’s bankruptcy protection?
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INSURANCE COMPANIES THAT EXPERIENCE FINANCIAL DIFFICULTIES (INSOLVENCY) ARE TAKEN OVER BY THE INSURANCE DEPARTMENT OF THE STATE IN WHICH THEY ARE BASED (DOMICILED).
CLAIMS CONTINUE TO BE HONORED AS LONG AS PREMIUMS ARE PAID OR CASH VALUE EXISTS.
THE CLAIMS WILL BE COVERED BY THE GUARANTY ASSOCIATION, WHICH WILL EITHER PAY THEM DIRECTLY OR TRANSFER THE POLICIES TO A FINANCIALLY SOUND INSURANCE COMPANY
Insolvent?
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GENERALLY, INDIVIDUAL OR GROUP LIFE AND HEALTH INSURANCE POLICIES AS WELL AS INDIVIDUAL ANNUITY CONTRACTS ISSUED BY THE GUARANTY ASSOCIATION’S MEMBER INSURERS ARE COVERED.
BE SURE TO CONTACT YOUR STATE’S GUARANTY ASSOCIATION WITH COVERAGE QUESTIONS.
What is covered?
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NOT ALWAYS.
EACH STATE HAS ITS OWN COVERAGE LIMITS.
THESE LIMITS APPLY TO THE TYPE OF POLICY PURCHASED (I.E., ANNUITY, LIFE, HEALTH, ETC.).
BE SURE TO CONTACT YOUR STATE’S GUARANTY ASSOCIATION WITH COVERAGE QUESTIONS.
Are policies fully protected?
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GUARANTY ASSOCIATIONS HAVE MAXIMUM BENEFIT LIMITS. LIMITS VARY FROM STATE TO STATE, BUT MOST STATES PROVIDE AT LEAST:
$300,000 IN LIFE INSURANCE DEATH BENEFITS
$100,000 IN CASH SURRENDER OR WITHDRAWAL VALUES FOR LIFE INSURANCE
$100,000 IN WITHDRAWAL AND CASH VALUES FOR ANNUITIES
$100,000 IN HEALTH INSURANCE POLICY BENEFITS
What is the average coverage limit?
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GENERALLY, IF THERE ARE OBLIGATIONS UNDER A VARIABLE ANNUITY CONTRACT THAT ARE GUARANTEED THE CONTRACT WILL BE ELIGIBLE FOR GUARANTY ASSOCIATION COVERAGE.
COVERAGE IS SUBJECT TO APPLICABLE LIMITS AND EXCLUSIONS ON COVERAGE.
SPECIFIC QUESTIONS REGARDING COVERAGE WILL BE DETERMINED BY THE GUARANTY ASSOCIATION BASED ON THE TERMS OF THE CONTRACT.
Are variable annuities covered?
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SINCE 1992 THERE HAVE BEEN ABOUT 62 LIFE AND HEALTH INSOLVENCIES ACROSS THE COUNTRY.
SOURCE: NATIONAL ORGANIZATION OF LIFE & HEALTH GUARANTY ASSOCIATIONS.
WWW.NOLHGA.COM
Is insolvency common?
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THE GUARANTY ASSOCIATION IS NOT AND SHOULD NOT BE A SUBSTITUTE FOR YOUR PRUDENT SELECTION OF AN INSURANCE COMPANY THAT IS WELL MANAGED AND FINANCIALLY STABLE.
1. USE INSURERS THAT RECEIVE HIGH MARKS FOR FINANCIAL STRENGTH AND SIZE
STRENGTH: ‘A’ OR BETTERSIZE: IX OR BETTER
2. SPLIT FUND LARGE VALUE SETTLEMENTS WHEN AN ANNUITY IS DESIRED.
What can I do to manage risk?
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RISK MANAGEMENT
THE USE OF TWO OR MORE UNDERWRITERS WHEN AN ANNUITY IS PART OF THE SETTLEMENT.
What is split funding?
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1. USE INSURERS THAT RECEIVE HIGH MARKS FOR FINANCIAL STRENGTH AND SIZE.
2. GUARANTY ASSOCIATIONS HAVE MAXIMUM BENEFIT LIMITS. LIMITS VARY FROM STATE TO STATE.
3. INSURANCE COMPANIES CANNOT GO BANKRUPT SECTION 11 USC 109(B)(2) AND (3).
4. SPLIT FUND LARGE VALUE SETTLEMENTS WHEN AN ANNUITY IS DESIRED.
Review
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WWW.NOLHGA.COM
NATIONAL ORGANIZATION OF LIFE &
HEALTH GUARANTY ASSOCIATIONS
Want more info?What about your state?
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