What happens when my insurance company goes out of business?
Generally, the 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 Illinois 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 Association cannot make statements regarding coverage of a specific policy unless it is a policy with a company for which the Association has been activated to provide protection.
What is the Illinois Life & Health Insurance Guaranty Association?
The Illinois Life and Health Insurance Guaranty Association (the "Association") was established to provide protection in the unlikely event that your life, annuity or health insurance company becomes financially unable to meet its obligations and is taken over by its Insurance Department. If this should happen, the Association will typically arrange to continue coverage and pay claims, in accordance with Illinois law, with funding from assessments paid by other insurance companies.
What protections are provided by the Association?
The basic protections provided by the Association for the insured of a member insurer which is found to be insolvent on or after August 20, 2010 are:
- $300,000 in death benefits
- $100,000 in cash surrender or withdrawal values
- $500,000 in hospital, medical and surgical insurance benefits*
- $300,000 in disability insurance benefits
- $300,000 in long-term care insurance benefits
- $100,000 in other types of health insurance benefits
- $250,000 in withdrawal and cash values
*The maximum amount of protection for each individual, regardless of the number of policies or contracts, is $300,000 except special rules apply with regard to hospital, medical and surgical insurance benefits for which the maximum amount of protection is $500,000.
HMO Certificates Not Covered
Certificates under health maintenance organization plans are not covered by this Association.
Refer to the Act (215 ILCS 5/531.03) for other policies and contracts, or portions thereof, which are excluded from coverage.
Who is covered by the Association?
In general, the Association provides coverage to residents of Illinois. However, there are some circumstances in which a non-resident may be entitled to coverage and some circumstances in which a resident of Illinois will not be entitled to coverage.
At what point in time is residency determined?
Residency will be determined on the date the insurer is determined to be impaired or insolvent. If a person satisfies the Illinois residency test as of that date, coverage will continue even if the person moves outside of Illinois.
Are there limitations on the amount of interest the Association is obligated to pay or credit with respect to covered policies or contracts that provide for guaranteed minimum interest rates?
Yes. There are a variety of limitations set forth in the Act. For example, some interest rates promised in a policy or contract may be rolled back when measured against Moody's Corporate Bond Yield Average.
Are there other limitations on the Association's liability?
Yes. For example, the Association's liability is never greater than the benefits promised by the insolvent insurer.
Are there conditions which a person must satisfy in order to receive payments from the Association?
Yes. For example, the policy owner must continue to pay the premiums that are due under the policy.
Where can I get advice on purchasing life, health, or annuity products?
The guaranty association does not provide advice on the purchase of insurance products, nor does the Association provide financial advice or comment on the financial condition of any particular company. You may contact your state insurance department regarding information on a particular company and insurance products in general.
Are you a State agency?
No. The Association is a private entity, with its membership made up of all the life and health insurers licensed in the state. The Association was created by the legislature to serve as a safety net (subject to statutory limits) for Illinois residents should their life or health insurer fail.
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.
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 Illinois, you may call the Department of Insurance at 866-445-5364 or 217-782-4515. The Department maintains complete and current records of all insurance companies licensed to do business in Illinois. Information about companies licensed to write insurance in Illinois 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?
You will have a claim against the insolvent company’s estate for amount owed to you and not paid by the guaranty association.
NOTE: This information is not intended as legal advice, and no liability is assumed in connection with its use. The applicable state guaranty association statute is the controlling authority, regardless of any information presented on this site. Users should seek advice from a qualified attorney and should not rely on this compilation when considering any questions relating to guaranty association coverage.