Key Takeaways
- Maryland Life & Health Insurance Guaranty Corporation protects policyholders when insurers become insolvent
- Coverage limits include \$300,000 maximum for life insurance death benefits
- Cash surrender values are protected up to \$100,000
- Annuity coverage is limited to \$250,000 in present value
- Producers cannot use guaranty corporation coverage as a selling point
Maryland Life and Health Insurance Guaranty Corporation
The Maryland Life & Health Insurance Guaranty Corporation protects Maryland residents when life and health insurance companies become insolvent.
Purpose and Function
The Guaranty Corporation:
- Protects policyholders of insolvent insurers
- Continues coverage or pays claims up to limits
- Is funded by assessments on member insurers
- Operates under state law supervision
How It Works
When an insurer becomes insolvent:
- State takes over - Insurance Commissioner places insurer in liquidation
- Guaranty Corporation activates - Takes responsibility for covered policies
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
Coverage Limits
The Maryland Guaranty Corporation provides coverage up to specific limits:
Life Insurance
| Benefit Type | Maximum Coverage |
|---|---|
| Death Benefit | $300,000 per life |
| Cash Surrender Value | $100,000 per policy |
Annuities
| Benefit Type | Maximum Coverage |
|---|---|
| Present Value | $250,000 per contract |
Health Insurance
| Coverage Type | Maximum Coverage |
|---|---|
| Health Benefits | $500,000 per individual |
| Disability Income | $300,000 per individual |
What Is Covered
The Guaranty Corporation covers:
Covered Policies
- Individual life insurance
- Group life insurance (Maryland residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
Not Covered
- Policies from insurers not licensed in Maryland
- Policies from insurers not members of the corporation
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
Funding
The Guaranty Corporation is funded by assessments:
- Member insurers pay assessments
- Assessments based on premium volume
- May be passed through to policyholders
- Recouped through rate adjustments
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use guaranty corporation coverage as a selling point
- Advertise guaranty corporation protection
- Imply policies are "guaranteed" by the corporation
- Compare the corporation to FDIC insurance
Exam Tip: Remember that producers CANNOT use guaranty corporation coverage as a selling point. This is a frequently tested rule.
What is the maximum death benefit coverage provided by the Maryland Guaranty Corporation?
Can a Maryland insurance producer use guaranty corporation coverage as a selling point?
What is the maximum cash surrender value coverage provided by the Maryland Guaranty Corporation?
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