What is the maximum amount that the guaranty association would have to pay on a life insurance death benefit?
The information below contains general responses to questions which the Maine Bureau of Insurance is frequently asked regarding protections that insurance purchasers have in the event their insurer becomes insolvent. These responses are not intended to address either all or specific situations nor is it intended to provide specific legal advice. Yes. For many lines of insurance, policyholder protection is provided through either the Maine Insurance Guaranty Association or the Maine Health and Life Insurance Guaranty Association. These are private associations to which all insurers authorized to
transact insurance in Maine are required to belong as a condition of their licensure. In the event of the insolvency of a member insurer, the associations become responsible for covered claims to the extent required by Maine law. Generally, the Maine Insurance Guaranty Association responds in the case of insolvencies of insurers writing Maine property and casualty insurance business while the Maine Life and Health Insurance Guaranty Association responds to insolvencies of insurers having Maine
life or health insurance or annuity business. Yes. Both associations have residency requirements. All 50 U.S. states and the District of Columbia have similar associations however, so if you do not meet Maine’s residency requirement, you may qualify for protection elsewhere. The guaranty
associations are responsible for policy obligations which the insolvent insurer would have been responsible for if it had not become insolvent subject to the limitations set forth in the following tables: Maine Insurance Guaranty Association limits of protection Workers’ Compensation benefit claims Covered in full All other covered benefit claims $300,000 Unearned premiums $25,000 subject to $50 deductible 1 No coverage available for first party claims of insureds whose net worth exceeds $25 million. Maine Health and Life Insurance Guaranty Association limits of protection Maximum protection4 5 Life Insurance $300,000 death benefits/$100,000 net cash value with respect to any one life Basic, Hospital, Surgical Insurance $300,000 Disability and Long Term Care Insurance $300,000 All Other Health Insurance $500,000 Annuities $250,000 present value including net cash value 3 Maine law provides 13 exceptions to the definition of “covered claim”. Key exceptions that are the subject of many queries to the Bureau of Insurance are exceptions for portions of a policy or contract not guaranteed by an insurer and for elements of a policy or contract where risk is borne by the
policy or contract holder. This means that there is no Association protection for non-guaranteed elements of variable annuities or for fixed annuity interest which had been projected by the insolvent insurer, but neither guaranteed nor credited prior to insolvency. No. The Maine Insurance Guaranty Association will become possessed of your claim file directly from the insolvent insurer and promptly assume claims administration. With respect to life or health
insurance or annuities, frequently blocks of business of financially troubled or insolvent insurers are sold to other insurers. If that should happen, that purchasing insurer will assume your coverage. In the event, that the Maine Health and Life Insurance Guaranty Association became directly involved for policy administration, it would gain access to the insurer’s records and it would not be necessary for you to initiate contact. I am covered for health benefits through a multiple employer welfare arrangement. Am I protected by a guaranty association?No. I receive benefits through a self-funded or uninsured employee benefit plan. Am I protected by a guaranty association?No. I receive health benefits through a health maintenance organization (HMO). Am I protected by a guaranty association?No, however your HMO’s provider agreements should contain “hold harmless” agreements that protect you from liability to participating providers for covered services should the HMO fail to pay them due to its insolvency. I currently have life or health benefit coverage through a fraternal benefit society. Am I protected by a guaranty association if my society becomes insolvent?No. I have a policy of a kind excluded from guaranty association protection. What happens to my claim for benefits if my insurer becomes insolvent?You will likely become a creditor in the receivership or liquidation proceeding of the insurer and will receive notices from the court-appointed receiver. What resources do the guaranty associations have to pay my claim?Both guaranty associations have access to short-term financing as well as the ability to levy assessments on their remaining solvent members in order to raise funds to meet their obligations. How can I find out more information about the guaranty associations?Information regarding the Maine Insurance Guaranty Association can be found on the website of its administrator, Guaranty Fund Management Services, at www.gfms.org. Information regarding the Maine Life and Health Insurance Guaranty Association can be found on its website, www.melifega.org. Attorney Ben Yardley at the Maine Bureau of Insurance may be contacted by mail at 34 State House Station, Augusta, ME 04333 or by telephone at 1-800-300-5000. What is the most the insurance guaranty association will pay?Auto, home, business and related types of insurance - the Guaranty Association will pay up to the policy limit, or up to $300,000, whichever is lower. Life, health and long-term care insurance, or annuities - the Guaranty Association will pay up to the policy limit, or up to $500,000, whichever is lower.
What is the current limit of the guarantee fund?The maximum recovery for a claim against the Guaranty Fund is $30,000 per claimant, or the amount the homeowner paid to the contractor against whom the Guaranty Fund claim is made, whichever amount is less. The maximum amount that the Fund will pay on behalf of the same contractor is $100,000 to all claimants.
What is the maximum of protection per life provided by the life insurance company guaranty Corporation?Protections and Limits on Protection
The Guaranty Fund provides up to $500,000 of coverage to a life insurance policy owner, individual annuity (such as a single premium deferred annuity) contract holder or individual accident and health insurance policyholder, or any beneficiary, assignee, or payee of the foregoing.
What is the maximum dollar amount that the California life and health insurance guaranty association will cover for an annuity on a single life?The maximum total amount the Guarantee Association will provide for any one individual for life insurance and annuity coverage is $300,000, even if that individual is covered by multiple life insurance policies and annuities.
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