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| What happens when my insurance company goes out of business? In most cases, a guaranty association will continue coverage as long as premiums are paid or cash value exists. It may do this directly or, most often, it may transfer the policy to another insurance company. In any case, policyholders should continue making premium payments to keep their coverage in force. |
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| How is policy coverage determined? Coverage is determined by North Carolina law and policy language at the time the guaranty association is activated to provide protection (when the member insurer is found to be financially impaired or insolvent). In light of changes in the law and the dramatic variations in policy language, the association cannot make statements regarding coverage of a specific policy unless it is a policy with a company for which the association has been activated to provide protection. |
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| What is the North Carolina Life & Health Insurance Guaranty Association? The North Carolina Life & Health Insurance Guaranty Association was created by the North Carolina legislature in 1974 to protect state residents who are policyholders and beneficiaries of policies issued by an insolvent member insurance company, up to specified limits. All insurance companies (with limited exceptions) licensed to write life and health insurance or annuities in North Carolina are required, as a condition of doing business in the state, to be members of the guaranty association. If a member company becomes insolvent, money to continue coverage and pay claims is obtained through assessments of the guaranty association's other member insurance companies writing the same line or lines of insurance as the insolvent company. All 50 states, the District of Columbia, and Puerto Rico have life and health insurance guaranty associations. |
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| Who is protected? The guaranty association covers individual policyholders and their beneficiaries. Also, persons protected by certificates of insurance issued under group contracts are also covered. Limits on benefits and coverage are established by state law. For more information about coverage, see the questions below or contact the guaranty association or state insurance department. |
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| Does it matter where I live? Yes. The guaranty association covers only North Carolina resident policyholders and certificate holders. Residency is determined on the date that a member insurer is declared insolvent. Guaranty association coverage is, however, currently provided to residents of all 50 states, Puerto Rico, and the District of Columbia through other guaranty associations. If you are a resident of another state, please contact your department of insurance for contact information for the guaranty association in your state or visit the "Facts & Figures Association Contact Info" section at www.nolhga.com for a complete list of guaranty associations. You may also want to go to the Links section of this site to determine if your state's guaranty association has a Web site. Note that guaranty association coverage varies by state. As a result, coverage provided by the Guaranty Association Act of this state may not be the same as coverage provided by another state's law. |
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| What contracts are covered? Generally, life, health insurance and annuity policies as well as certificates under group policies and contracts issued by the guaranty association's member insurers are covered by the association. Such coverage is limited by the terms of the North Carolina Life & Health Insurance Guaranty Association Act (a link to the Act can be found in the Additional Info section). Types of property and casualty insurance--such as automobile, homeowners, professional liability, medical malpractice, workers' compensation, etc.--may be protected by the North Carolina Insurance Guaranty Association. That guaranty association can be reached at: North Carolina Insurance Guaranty Association P. O. Box 176010 Raleigh, NC 27619-6010 Phone: : 919.783.9790 Wed Site: www.ncrb.org/nciga |
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| Are all policies fully protected? Not always. If your insurance company fails, the maximum amount of protection provided by the North Carolina guaranty association for each individual is $300,000 no matter how many policies you bought from your company. The maximum coverage for an unallocated annuity is $5,000,000 per contract owner. The Guaranty Association will not cover the portion for which you, the policyholder, are at risk if you have a variable life or variable annuity contract. |
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| For example, if I own three annuities worth $200,000 each and my insurance company fails, how much is protected? The total protection per owner per member company is $300,000 for all annuity contracts. As a result, if an individual owned three $200,000 annuities with the same insolvent insurance company, the individual would have total guaranty association coverage of only $300,000. The value in excess of this statutory coverage limit would be eligible for submission as a creditor claim in the receivership, and the annuity holder may receive distributions as the receiver liquidates the company's assets. |
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| What will happen to my insurance coverage if the guaranty association becomes liable for my policy? Protection can be provided in one of several different ways. For example, a financially sound insurer may take over the troubled company's policies and assume the responsibility for continuing coverage and paying covered claims. The North Carolina guaranty association may provide coverage directly by continuing the insurer's policies or issuing replacement policies with the guaranty association; in some situations, the North Carolina guaranty association may work with other state guaranty associations to develop an overall plan to provide protection for the failed insurer's policyholders. The amount of protection provided and when you receive it may depend on the particular arrangement worked out for handling the failed insurer's obligations. For group health and cancelable individual health insurance, state law allows the guaranty association to continue your coverage only for a limited time based on the renewal date of your policy-for group policies, no less than 30 days and no more than 45 days; for individual cancelable policies, no less than 30 days and no more than one year. |
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| When might the guaranty association provide benefits? If your insurer is no longer able to fulfill its obligations, ongoing benefit payments to you may be reduced or suspended by the courts in order to sort out the affairs of the financially troubled insurer. As a result, you may have to wait many months before the guaranty association is activated to provide benefit payments. Hardship provisions may be instituted by the receiver to continue benefit payments. |
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| What is NOT protected by the guaranty association? Policies with insurers not licensed to do business in North Carolina; Health Maintenance Organization (HMO) contracts; policy benefits the insurer does not guarantee or for which the policyholder bears the risk (such as the non-guaranteed portion of a variable life insurance or annuity contract); self-insured employer plans; interest rate yields that exceed an average rate as specified in the Act; a stop-loss group insurance plan and fraternal benefit society insurance certificates. Other insurance policies and arrangements not listed here are also not protected if they do not meet the definition of a covered policy. If you are unsure about whether your policy is excluded from guaranty association protection, you should review the current Guaranty Association Act (a link to the Act can be found in the Additional Info section). |
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| How will I know if my life or health insurance company has failed or is unable to fulfill its obligations to its policyholders? You will receive a notification from the receiver and/or the North Carolina guaranty association if your insurance company is found to be insolvent and ordered liquidated. |
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| How can I find out if my company is licensed in North Carolina? Call the North Carolina Insurance Department at 800.546.5664. The department maintains complete and current records of all insurance companies licensed to do business in the state. To look up the license status of an insurance company, you can also refer to the web page http://infoportal.ncdoinet/cmp_lookup.jsp on the insurence department website. |
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| Why hasn't my agent or company told me more about the North Carolina Life & Health Insurance Guaranty Association? The law prohibits insurance agents and companies from using the North Carolina guaranty association in any advertising. 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. Agents are prohibited by statute from using this Web site or the existence of the guaranty association as an inducement to purchase insurance. For more information, see our Advertising Prohibition in the Additional Info section. |
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