State RegulationsNC specificDifficulty 2/5
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:
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Answer & full 3-part explanation (select an option above, or peek)
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.