State RegulationsIL specificDifficulty 3/5
An individual holds several contracts from the same insolvent Illinois insurer, including health benefit plan coverage alongside other products. What aggregate limit governs the guaranty association's total obligation to this one individual from this one insolvency?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The Illinois Life & Health Insurance Guaranty Association schedule under 215 ILCS 5/531.01 through 5/531.19 imposes an aggregate cap of $300,000 per individual per insolvency, but carves out health benefit plan benefits, which are capped at $500,000. Multiple policies from one insolvent insurer therefore do not stack into unlimited protection, and the health carve-out is the key exception tested on Illinois exams.
Why the other options are wrong
- B) The aggregate cap is $300,000, not $500,000, and health benefit plan benefits carry their own $500,000 cap rather than being folded into a combined limit.
- C) $250,000 is the individual annuity cap; it is not the aggregate limit across products.
- D) An aggregate cap does apply; the protection schedule expressly limits total coverage per individual per insolvency.
Memory hook
Everything stacks to $300,000 — except health, which gets its own $500,000 lane.