What happens to my policy when my insurance company is declared insolvent?
In most cases, the 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.
How is policy coverage determined?
Coverage is determined by New Hampshire 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 changes in the law and the dramatic variations in policy language, the Guaranty Association cannot make statements regarding coverage of a specific policy unless it is a policy with a company for which the Guaranty Association has been activated to provide protection.
What is the New Hampshire Life and Health Insurance Guaranty Association?
The New Hampshire Life and Health Insurance Guaranty Association was created by the New Hampshire legislature in 1971 to protect state residents who are policyholders and beneficiaries of policies issued by an insolvent insurance company, up to specified limits. Insurance companies (with certain exceptions) licensed to write life and health insurance or annuity contracts in New Hampshire 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.
Who is protected?
The Life and Health Insurance Guaranty Association covers 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.
If I move to another state after purchasing a policy, will I still have guaranty association coverage? If so, who will provide it?
If you purchased a covered policy from a company that is a member insurer of the state guaranty association where you reside, you will have coverage. Guaranty association protection is generally provided by the association in your state of residence at the date of the liquidation order regardless of where your policy was purchased. Policyholders who reside in states where the insolvent insurer was not licensed are covered, in most cases, by the guaranty association of the state where the failed company was domiciled.
What contracts are covered?
Generally, direct non-group life, health or annuity policies or contracts, and for certificates under direct group policies and contracts, and for supplemental contracts to any of these, and for unallocated annuity contracts issued by member insurers, except as limited by statute. Coverage is provided and limited by the terms of the New Hampshire Life and Health Insurance Guaranty Association Act.
Types of property and casualty insurance--such as automobile, homeowners, professional liability, medical malpractice, workers' compensation, etc.--may be protected by the New Hampshire Insurance Guaranty Association. That guaranty association can be reached at:
New Hampshire Insurance Guaranty Association
One Bowdoin Square
Boston, MA 02114-2916
Are there limits and exclusions to covered policies?
Yes. If your insurance company fails, the Association may become liable for benefits that are the lesser of benefits provided in your policy or contract, or with respect to any one life (regardless of the number of policies or contracts held):
For Life Insurance Benefits:
$300,000 in life insurance death benefits
$100,000 in life insurance net cash surrenders
For Health Insurance Benefits:
$100,000 for coverages not defined as disability insurance or basic hospital, medical and surgical insurance or long-term care insurance
$300,000 for disability insurance
$300,000 in long-term care benefits
$500,000 for basic hospital medical and surgical insurance or major medical insurance
For Annuity Contract Benefits:
$250,000 in annuity present value benefits
$250,000 in present value of structured settlement annuities
In addition, the aggregate liability to the Association for any one life is $300,000 except with respect to benefits for basic hospital, medical and surgical insurance and major medical in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual.
There are other limits set forth in the guaranty association statute for owners of multiple, non-group life insurance policies and unallocated annuity contracts limiting coverage to $5,000,000.
Please refer to the statute for specific coverage language and limits.
For example, if I own three annuities worth $100,000 each and my insurance company fails, how much is protected?
The total protection per owner per member company is $250,000 for all annuity contracts. As a result, if an individual owned three $100,000 annuities with the same insolvent insurance company, the individual would have total guaranty association coverage of only $250,000. 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.
What will happen to my insurance coverage if my company fails?
Protection may 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 Guaranty Association may provide coverage directly by continuing the insurer's policies or issuing replacement policies with the Guaranty Association; in some situations, the New Hampshire Life and Health Insurance 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.
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.
What is NOT covered by the guaranty association?
* Policies with insurers not licensed to do business in New Hampshire or those whose license may be suspended, revoked, not renewed or voluntarily withdrawn.
* Policies or contracts issued by:
* Reinsurance, unless assumption certificates have been issued
* Interest rate yields that exceed an average rate
* Any self-funded or uninsured plan or program of an employer, association or similar entity including, but not limited to benefits under:
* a multiple-employer welfare arrangement
* a minimum premium group insurance plan
* a stop-loss group insurance plan
* an administrative services only contract
* A policy or contract providing any hospital, medical, prescription drug or other health care benefits commonly known as Medicare Part C and D
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 coverage, you should review the current Guaranty Association Act.
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 New Hampshire Life and Health Insurance Guaranty Association if your insurance company is found to be insolvent and ordered liquidated.
How can I find out if my company is licensed in New Hampshire?
Contact the New Hampshire Insurance Department. The department maintains complete and current records of all insurance companies licensed to do business in the state.
Why hasn't my agent or company told me more about the New Hampshire Life and Health Insurance Guaranty Association?
The law prohibits insurance agents and companies from using the New Hampshire Life and Health Insurance 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.
Where can I get advice on purchasing life, health, or annuity products?
The guaranty association does not provide financial advice or comment on the financial condition of any particular company. You can obtain advice from captive insurance agents, independent insurance brokers, and rating agencies. Generally, captive agents sell products from a single insurer. Brokers usually can sell the products of multiple insurers.
Rating agencies assign comparative ratings to insurers based on various criteria. Most rating agencies are paid by the insurer to do an assessment examination and to issue a rating. This is the case with the largest and most well-known agencies, such as Standard and Poor’s, A. M. Best, Moodys, and Fitch Ratings. Since the companies pay to have themselves rated, those ratings are generally available to the public without charge. One rating agency does not accept payment from the insurer being rated TheStreet.com. You must pay to obtain its rating results.
You may also wish to contact your state insurance department regarding information on a particular company.
Are you a State agency?
No. The guaranty association is a private entity, with its membership made up of life and health insurers licensed in the state that write covered policies and contracts (under state law an insurer must be a member of the guaranty association to be licensed to do business). The guaranty association was created by the legislature to serve as a safety net, subject to statutory limits, for New Hampshire insurance consumers should their life or health insurer fail. By creating the guaranty association, the legislature was able to ensure continued coverage to residents affected by their insurer’s failure. The guaranty association works in cooperation with the Insurance Department in fulfilling its role of protecting residents whose insurance company is being liquidated.
How can I determine the financial soundness of my insurance company?
Consumers can contact the Insurance Department (603.271.2261) to determine if an insurance company is licensed to write business in New Hampshire. Consumers can also check the financial strength ratings of the company, which are issued by various ratings agencies (see "Where can I get advice on purchasing life, health, or annuity products?" above).
If my company is in the process of rehabilitation/conservation and I have an emergency and need to withdraw monies from my annuity, what is the process?
Surrenders and loans may be allowed on a case-by-case basis for genuine hardship situations upon written application to the Receiver. Hardship circumstances and procedures will differ from company to company and (after liquidation) from guaranty association to guaranty association. Examples of hardship cases may include (1) terminal illness or permanent disability; (2) substantial medical expenses not covered by medical insurance; (3) financial difficulties resulting in inability to pay for essential life support needs like food and shelter; (4) imminent removal from a hospital, nursing home, or other medical care facility due to inability to pay; (5) imminent bankruptcy; and (6) immediate need for college tuition payments for a dependent child.
Is long-term-care insurance covered by the guaranty association?
Yes, long-term-care insurance is typically considered health insurance and covered by the guaranty association.
Are variable annuities covered by the guaranty association?
Generally speaking, a variable annuity contract with general account guarantees will be eligible for guaranty association coverage, subject to applicable limits and exclusions on coverage. However, specific questions regarding coverage will be determined by the applicable guaranty association based on the terms of the contract, other relevant facts, and the guaranty association law in effect at the time of liquidation.
If my company is liquidated, do I have to file a claim with the guaranty association?
If your insurance company is liquidated, you will receive a notice from the court-appointed Receiver (typically the Insurance Commissioner of the company’s state of domicile), who will oversee the liquidation of the company and inform you of any new claims procedures. There may be no change in the claims submission process. Guaranty associations, working with the Receiver, sometimes continue processing claims using the liquidated company’s existing claims staff if that will maximize the speed and efficiency with which claims are processed. In other cases, the guaranty associations process the claims themselves or use an independent processing company known as a third-party administrator to process claims. In any event, you will be notified of the ongoing claims process. If you wish to continue coverage, you must continue to pay the premium required by your policy.
Should I continue to pay my premiums?
Yes. If you are paying premiums to your company and wish to keep your coverage in place, you must continue to do so - those premiums go to the guaranty association providing you continuing coverage. If you stop paying premiums, your insurance coverage may be terminated.
Is my company covered by the guaranty association?
The guaranty association provides coverage to owners of covered policies issued by member insurers (life, health, and annuity insurers licensed to write business in the state). To determine if a company is licensed to write business in New Hampshire, you may call the Insurance Department at 603.271.2261. The Department maintains complete and current records of all insurance companies licensed to do business in New Hampshire. Information about companies licensed to write insurance in New Hampshire may also be obtained from the Department’s Web site.
What happens if the benefits promised in my policy are greater than the coverage limits provided by the guaranty association?
Guaranty associations, in conjunction with the Receiver, may be able to negotiate a transfer of a company’s policies up to the amount of the guaranty association benefit limits to a financially sound insurer. If a guaranty association administers claims against the policy and the benefit limits are reached, any claim in excess of that limit may be submitted as a policyholder-level claim against the estate of the failed insurance company, and these over-limit claims will be adjudicated the Receiver, and there may or may not be claim payment.