All of the following entities regulate variable life policies except
A) The Guaranty Association.
B) Federal government.
C) The SEC.
D) The Insurance Department
[bg_collapse_level2 view=”button-orange” color=”#4a4949″ expand_text=”ShowAnswer” collapse_text=”Hide Answer” ]
The Correct Answer for the Given Question is Option A) The Guaranty Association.
The Guaranty Association
A guaranty association is a company which takes over the role of an insurer when it fails and provides certain continued benefits and/or resolves insured claims. Guarantee associations provide insurance policyholders and beneficiaries protection in case an insurance company fails to meet its obligations due to insolvency. There are insurance guaranty associations in all 50 states, the District of Columbia, and Puerto Rico.
In states where insurance companies are licensed to operate, they are required by law to belong to the guaranty association. Life and health guaranty associations and property and casualty insurance guaranty associations are the most common types in most states.
In the event of an insolvent insurance company, a guaranty association will obtain funds by assessing member companies writing the same type of insurance as the insolvent insurer. Based on these assessments and the insurer’s assets, the covered claims of the insolvent company are then paid up to the statutory limits. The association may also continue the policyholder’s coverage or transfer it to another insurer. Life and health guaranty associations guarantee individual and group life insurance policies, as well as annuities, long-term care and disability income insurance policies.
NOLHGA (National Organization of Life and Health Insurance Guaranty Associations) is the umbrella organization for all state guaranty associations. NOLHGA coordinates the activities of various guaranty associations for an insolvent life insurer that has policyholders in multiple states. State guaranty associations have access to NOLHGA resources and technical expertise, as well as a national forum to discuss guaranty issues.