A North Carolina member insurer becomes insolvent. For any one life, the Life and Health Insurance Guaranty Association provides protection equal to the lesser of the contractual obligations or:

Why C is correct

Under G.S. 58-62-21(d)(2),(6), the Association's aggregate obligation for any one life is the lesser of the contractual obligations or $300,000 for all benefits, including cash values, regardless of the number of policies the person holds. There is no separate cash-value sublimit; cash values count inside the single $300,000 cap.

Why the other options are wrong

• A is wrong because North Carolina has no separate $100,000 cash-value sublimit; cash values are folded into the single $300,000 aggregate cap.
• B is wrong because $500,000 is the limit for health benefit plans under G.S. 58-62-21(d)(2a), not the general per-life cap for life insurance benefits.
• D is wrong because $5,000,000 is the limit for certain unallocated annuity contract holders, not the cap for an individual life.

Memory hook

One life, one number: $300,000 all-in, cash values included.

Why A is correct

Under G.S. 58-62-21(d), the Association's limit for any one life is the lesser of the contractual obligations or $300,000 for all benefits, including cash values, regardless of how many policies the person holds. North Carolina folds cash values into the single $300,000 aggregate cap; there is no separate cash-value sublimit and no proportional payout formula.

Why the other options are wrong

• B) North Carolina has no separate $100,000 cash-value sublimit; cash values count inside the single $300,000 aggregate.
• C) The $500,000 figure applies only to health benefit plans, not to life insurance death benefits and cash values.
• D) North Carolina uses fixed dollar caps, not a percentage-of-obligations formula; no 80 percent ratio exists in the statute.

Memory hook

One life, one pot: $300k covers everything, cash values included.

Why C is correct

Under G.S. 58-62-21(d)(2) and (d)(6), the Association's aggregate obligation for any one life is the lesser of the contractual obligations or $300,000 for ALL benefits, including cash values, regardless of the number of policies held. North Carolina folds cash values into the single $300,000 cap rather than adding a separate cash-value sublimit, so owning several policies with the same member insurer does not multiply the protection. Member insurers must also deliver the Commissioner-approved summary document about the Association at or before policy delivery.

Why the other options are wrong

• A) G.S. 58-62-21(d) includes cash values inside the $300,000 cap; there is no separate add-on payment for cash values.
• B) $500,000 is the guaranty limit for health benefit plans under G.S. 58-62-21(d)(2a), not for life insurance benefits on one life.
• D) G.S. 58-62-21(d)(2) and (d)(6) cap coverage per life regardless of how many policies were purchased from the member insurer.

Memory hook

One life, one cap: $300k covers everything, cash values included.

Why B is correct

Under G.S. 58-62-21(d)(2) and (6), guaranty association benefits for any one life are the lesser of the contractual obligations or $300,000 for all benefits, including cash values, no matter how many policies the person owns. North Carolina folds cash values into the single aggregate cap rather than adding a separate cash-value sublimit.

Why the other options are wrong

• A) North Carolina has no separate $100,000 cash-value sublimit; cash values count inside the single $300,000 aggregate cap.
• C) The $500,000 figure applies to health benefit plans under G.S. 58-62-21(d)(2a), not to life insurance death benefits and cash values.
• D) North Carolina uses fixed dollar caps under G.S. 58-62-21(d); no percentage-of-obligations formula exists.

Memory hook

One life, one pot: $300k total, cash values included.

Why D is correct

Under G.S. 58-62-21(d)(2),(6), the Association's limit for any one life is the lesser of the contractual obligations or $300,000 for all benefits including cash values, regardless of the number of policies. North Carolina folds cash values into the single $300,000 aggregate rather than creating a separate cash-value sublimit.

Why the other options are wrong

• A) There is no separate $100,000 cash-value sublimit in North Carolina; cash values are included within the $300,000 aggregate.
• B) $150,000 is not a North Carolina guaranty association limit.
• C) $350,000 is not a North Carolina guaranty association limit.

Memory hook

$300k covers everything — cash values included, no sublimit.

Why D is correct

Under G.S. 58-62-21(d), the North Carolina Life and Health Insurance Guaranty Association's obligation for any one life is capped at the lesser of the contractual obligations or $300,000 for all benefits, including cash values, no matter how many policies the person owned. North Carolina folds cash values into the single $300,000 aggregate cap.

Why the other options are wrong

• A) North Carolina has no separate $100,000 cash-value sublimit; cash values count inside the $300,000 aggregate.
• B) $500,000 is the limit for health benefit plans under G.S. 58-62-21(d)(2a), not the life aggregate.
• C) North Carolina uses fixed dollar caps, not a percentage formula, and no $350,000 tier exists.

Memory hook

One life, one cap: three hundred thousand, cash values included.