State RegulationsNC specificDifficulty 1/5
A North Carolina member insurer becomes impaired. One policyholder holds life coverage whose death benefit and accumulated cash values together far exceed the guaranty cap, spread across several policies with the same insurer. What is the maximum the North Carolina Life and Health Insurance Guaranty Association provides for this one life?
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Answer & full 3-part explanation (select an option above, or peek)
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.