4.3 Connecticut Life and Health Insurance Guaranty Association
Key Takeaways
- CLHIGA protects Connecticut policyholders when insurers become insolvent
- Coverage limits include \$500,000 for life insurance death benefits (higher than most states)
- Health insurance and disability coverage is limited to \$500,000 per individual
- Annuity coverage is limited to \$250,000 in present value
- Producers cannot use guaranty association coverage as a selling point
The Connecticut Life and Health Insurance Guaranty Association (CLHIGA) protects Connecticut 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 - Insurance Commissioner places insurer in liquidation
- Association activates - Takes responsibility for covered policies
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
Coverage Limits
CLHIGA provides coverage up to specific limits (Connecticut has higher limits than many states):
Life Insurance
| Benefit Type | Maximum Coverage |
|---|---|
| Death Benefit | $500,000 per life |
| Cash Surrender Value | $500,000 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 | $500,000 per individual |
| Long-Term Care | $500,000 per individual |
Exam Tip: Connecticut has higher guaranty association limits than most states ($500,000 vs. $300,000 for many coverage types).
What Is Covered
Covered Policies
- Individual life insurance
- Group life insurance (Connecticut residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
Not Covered
- Policies from insurers not licensed in Connecticut
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
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 to FDIC insurance
- Use guaranty coverage to induce sales
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 Connecticut guaranty association for a life insurance policy?
Can a Connecticut insurance producer use guaranty association coverage as a selling point?
How does Connecticut's guaranty association death benefit limit compare to most other states?
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