Key Takeaways
- TLHIGA protects Texas policyholders when insurers become insolvent
- Maximum coverage is $300,000 for life insurance death benefits
- Health insurance coverage is limited to $500,000 per individual
- Annuity coverage is limited to $250,000 in present value
- Producers cannot advertise or use guaranty association coverage as a selling point
Last updated: January 2026
Texas Life and Health Insurance Guaranty Association
The Texas Life and Health Insurance Guaranty Association (TLHIGA) protects Texas residents when life and health insurance companies become insolvent.
Purpose and Function
TLHIGA:
- Protects policyholders of insolvent insurers
- Continues coverage or pays claims up to limits
- Funded by assessments on member insurers
- Operates under state law supervision
How It Works
When an insurer becomes insolvent:
- TDI takes over - Places insurer in liquidation
- TLHIGA activates - Takes responsibility for covered policies
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
Coverage Limits
TLHIGA 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 |
| Net Cash Surrender | $100,000 per policy |
Annuities
| Benefit Type | Maximum Coverage |
|---|---|
| Present Value | $250,000 per contract |
| Multiple Annuities | $250,000 total per owner |
Health Insurance
| Coverage Type | Maximum Coverage |
|---|---|
| Health Benefits | $500,000 per individual |
| Disability Income | $300,000 per individual |
| Long-Term Care | $300,000 per individual |
What Is Covered
TLHIGA covers:
Covered Policies
- Individual life insurance
- Group life (Texas residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
Not Covered
- Policies from unlicensed insurers
- Self-funded employer plans
- Surplus lines policies
- Amounts above coverage limits
- Unallocated annuity contracts (certain)
Funding
TLHIGA is funded by assessments:
- Member insurers pay assessments
- Based on premium volume in Texas
- May be passed to policyholders in some cases
- Recouped through rate increases
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use TLHIGA coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by association
- Compare TLHIGA to FDIC or SIPC
Required Conduct
- Provide accurate information if asked
- Cannot misrepresent coverage limits
- Cannot suggest coverage exceeds actual limits
- Must not use coverage to induce sales
Exam Tip: Remember that producers CANNOT use guaranty association coverage as a selling point. This is a frequently tested rule in Texas.
Claims Process
When an insurer becomes insolvent:
- Notice sent to policyholders
- Coverage reviewed by TLHIGA
- Benefits continued or claims paid
- Policy may be transferred to healthy insurer
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Test Your Knowledge
What is the maximum death benefit coverage provided by TLHIGA for a life insurance policy?
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D
Test Your Knowledge
Can a Texas insurance producer use TLHIGA coverage as a selling point?
A
B
C
D
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