LIFE INSURANCE GUARANTY - 11/14/08
Jeff: Over the last year we have talked about Federal insurance of your bank accounts and pensions. But what about your life insurance? Who insures your life insurance? Here to talk about these issues is attorney Michael Solomon.
Jeff: Let’s say I took out a life insurance policy when I was younger, paid my premiums religiously so that I now have a paid up policy. What happens if the insurance company goes bankrupt?
Mike: Unlike your bank accounts and pension benefits, the Federal government does not provide any guarantees of life insurance. Life insurance companies are regulated by state law not federal law. Each state has its own separate fund that insures the insurance companies. In Ohio it is called the Ohio Life and Health Insurance Guaranty Association which insures health insurance policies, annuities and life insurance.
Jeff: So how much insurance do I have on my insurance?
Mike: The maximum protection is:
Life Insurance Death Benefits - $300,000
Life Insurance Cash Value - $100,000
Annuity Benefits- $100,000
Health Insurance Claims- $100,000
The most any individual can receive from the Ohio Guaranty Fund is $300,000.
This insurance only applies to companies licensed to sell insurance in Ohio. If you buy a policy in Ohio and move to a different state, you become covered by that state’s guaranty association. For example if you move to Florida or Nevada and your insurance company goes insolvent you are covered by Florida or Nevada. By the way, those states give more coverage than Ohio.
What if too many insurance companies cannot pay their bills? Who knows if there is enough money in the insurance guaranty? I could not find any information on the web on the solvency of the Ohio Guaranty Fund. And it is not backed by the State of Ohio.
Jeff: What should you do if you are concerned about your insurance?
Mike: According to the Ohio Department of Insurance, all Ohio life insurance companies are financially sound and are able to honor all claims. If for some reason you feel less than comforted by that statement, you might first contact the person who sold you the policy to see if they can help you. Also you could call the Ohio Department of Insurance Consumer Services at 800-686-1526 or go to www.ohioinsurance.gov. for more information.
Jeff: Thank you.
