Key Takeaways
- Maine Life & Health Insurance Guaranty Association 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 association coverage as a selling point
Maine Life and Health Insurance Guaranty Association
The Maine Life & Health Insurance Guaranty Association protects Maine residents when life and health insurance companies become insolvent.
Purpose and Function
The Guaranty Association:
- 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 - Superintendent of Insurance places insurer in liquidation
- Guaranty Association activates - Takes responsibility for covered policies
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
Coverage Limits
The Maine Guaranty Association 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 Association covers:
Covered Policies
- Individual life insurance
- Group life insurance (Maine residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
Not Covered
- Policies from insurers not licensed in Maine
- Policies from insurers not members of the association
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
Funding
The Guaranty Association 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 association coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by the association
- Compare the association to FDIC insurance
Exam Tip: Remember that producers CANNOT use guaranty association coverage as a selling point. This is a frequently tested rule.
What is the maximum death benefit coverage provided by the Maine Guaranty Association?
Can a Maine insurance producer use guaranty association coverage as a selling point?
What is the maximum cash surrender value coverage provided by the Maine Guaranty Association?
What is the maximum annuity coverage provided by the Maine Guaranty Association?
Which of the following is a prohibited unfair trade practice in Maine?
What is the term for excessive policy replacement to generate commissions?
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