Most states have guaranty funds to help pay the claims of financially impaired insurance companies. State laws specify the types of insurance covered by these funds and the dollar limits payable. Coverage is usually for individual policyholders and their beneficiaries, not group contracts. Most states also restrict insurance advisers and companies from advertising the funds' availability.
The California Life & Health Insurance Guarantee Association was created in 1991 when the California legislature enacted the California Life and Health Insurance Guarantee Association Act.
The guarantee association is made up of all insurers licensed to sell life insurance, health insurance, and annuities in California. If a member insurer becomes insolvent and is liquidated by court order, the Guarantee Association provide protection up to the limits spelled out in the Act to California residents who are holders of life and health insurance policies, and annuity contracts, with the insolvent insurer.
When a member insurer becomes insolvent, a special deputy receiver takes over the insurer under court supervision and processes the assets and liabilities through liquidation. The Guarantee Association also services the company's policies and provides coverage to California's resident policyholders.
Following is a brief summary of this law's coverages, exclusions and limitations.
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