State RegulationsIL specificDifficulty 2/5
An Illinois resident holds an individual life policy with a death benefit far above the guaranty association limit when the issuing insurer is ordered liquidated with a finding of insolvency. What does the Illinois Life & Health Insurance Guaranty Association provide for the life insurance death benefit?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under the Illinois Life & Health Insurance Guaranty Association framework at 215 ILCS 5/531.01 through 5/531.19, life insurance death benefits are covered up to $300,000 per individual. The $500,000 figure belongs to health benefit plan benefits, and the $100,000 figure applies to life cash surrender and withdrawal values, so mixing them up is the classic Illinois guaranty error.
Why the other options are wrong
- B) $500,000 is the cap for health benefit plan benefits, not for life insurance death benefits.
- C) $100,000 is the cap for life cash surrender and withdrawal values, not death benefits.
- D) Life insurance death benefits are squarely within the guaranty association's protection schedule; they are covered, subject to the $300,000 cap.
Memory hook
Life death = 300; health = 500; cash values = 100. Don't swap Illinois caps.