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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 Connecticut law and policy language at the time the guaranty association is activated to provide protection (when the member insurer is found to be insolvent and ordered liquidated by a court). In light of potential 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 Connecticut Life and Health Insurance Guaranty Association? The Connecticut Life and Health Insurance Guaranty Association was created by the Connecticut legislature in 1989 to protect state residents who are policyholders and beneficiaries of policies issued by an insolvent insurance company, up to specified limits. All insurance companies (with limited exceptions) licensed to write life and health insurance or annuities in Connecticut 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? Life and health insurance guaranty associations cover individual policyholders and their beneficiaries; typically, persons protected by certificates of insurance issued under policies of group life or group health insurance 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 Connecticut 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. 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, direct individual or direct group life and health insurance policies as well as individual annuity contracts issued by the guaranty association's member insurers are covered by the association. Such coverage is limited by the terms of the Connecticut Life and Health Insurance Guaranty Association Act (see 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 Connecticut Insurance Guaranty Association. That guaranty association can be reached at: Connecticut Insurance Guaranty Association One Bowdoin Square Boston, MA 02114-2916 Ph. 800.852.2003 |
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| Are all policies fully protected? Not always. If your insurance company fails, the maximum amount of protection provided by the Connecticut guaranty association for each type of policy issued by the same company, no matter how many of that type of policy you bought from that company, is: Life Insurance Death Benefit: $500,000 per insured life Life Insurance Cash Surrender: $500,000 per insured life Health Insurance Claims: $500,000 per insured life Annuity Benefits (Present Value): $500,000 per contract owner In no event, however, will the guaranty association be liable for more than $500,000 in the aggregate for any one insured life for all policies issued by an insolvent insurance company on that life. |
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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 $500,000 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 $500,000. 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 company's assets are liquidated by the receiver. |
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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 Connecticut guaranty association may provide coverage directly by continuing the insurer's policies or issuing replacement policies with the guaranty association; in some situations, the Connecticut 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 terminate your coverage after a specified period of time, but not less than 30 days after the guaranty association becomes obligated to provide benefits. |
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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 Connecticut; 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; and fraternal benefit society insurance certificates. Certain, less commonly known insurance policies and arrangements not listed here are also not protected. If you are unsure about whether your policy is excluded from guaranty association protection, you should contact the guaranty association. |
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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 liquidator and/or the Connecticut 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 Connecticut? Call the Connecticut Insurance Department Consumer Affairs Division at 800.203.3447. The Insurance Department maintains complete and current records of all insurance companies licensed to do business in the state. |
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| Why hasn't my agent or company told me more about the Connecticut Life and Health Insurance Guaranty Association? The law prohibits insurance agents and companies from using the Connecticut 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. |
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