4.3 Texas Life and Health Insurance Guaranty Association
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
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?
A
B
C
D
Test Your Knowledge
Can a Texas insurance producer use TLHIGA coverage as a selling point?
A
B
C
D