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Founded in 1983, NOLGHA was formed when the individual state guaranty associations decided that they needed some sort of backing to help life and health insurance customers and their beneficiaries in the even that their insurance company was unable to pay. Each individual state, the District of Columbia, as well as Puerto Rico has its own association, as each state has its own life insurance rules and guidelines to follow.
Below are a few of the most Frequently Asked Questions (FAQ’s) regarding Guaranty Associations, state regulations, and NOLGHA:
WHAT HAPPENS WHEN MY LIFE AND/OR HEALTH INSURANCE COMPANY GOES OUT OF BUSINESS?
The National Organization of Life & Health Insurance Guaranty Association (NOLHGA) will either cover your claim themselves or transfer you’re your policy to a competent insurance company for payment.
IF MY INSURANCE COMPANY GOES OUT OF BUSINESS, WHY DO I NEED TO PAY MY PREMIUMS?
The State Life Insurance Association will take over only if your policy is current, so you will want to make sure all policies are up to date.
WHO DO I CONTACT WITH QUESTIONS ABOUT MY INDIVIDUAL POLICY?
Whatever state you currently live in is the State Association that you will need to contact, even if the policy was taken out in a different state.
ARE ALL OF MY INSURANCE POLICIES COMPLETELY PROTECTED?
Several factors are involved with this question.
First, only health and life insurance policies are covered by NOLGHA. The National Conference of Insurance Guaranty Funds is responsible for any property and/or casualty insurance claims.
Second, just as FDIC protects banking deposits up to $100,000, NOLGHA has limits as well, and again are decided upon at the state level. Most states provide at least:
*$300,000 in life insurance death benefits (per insured life)
*$100,000 in cash surrender or withdrawal values for life insurance (per insured life)
*$100,000 in withdrawal and cash values for annuities (per insured life)
*$100,000 in health insurance policy benefits (per insured life)
If the value of your policy is higher than your state benefit limits, you may not lose the remaining money. You can file a creditor claim against the estate of your failed insurance company. When your failed insurance company’s assets are liquidated, your policy balance may be paid at the discretion of the courts.
