State RegulationsNC specificDifficulty 1/5
An insured in Greensboro held several individual life insurance policies from a failed member insurer, with total contractual obligations far above the statutory cap. What is the maximum the North Carolina Life and Health Insurance Guaranty Association provides for all benefits for this one life, regardless of the number of policies?
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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, no matter how many policies the person held with the insolvent insurer. North Carolina folds cash values into the single $300,000 aggregate cap; there is no separate cash-value sublimit and no percentage-based payment formula.
Why the other options are wrong
- A) North Carolina has no separate lower cash-value sublimit; cash values count inside the $300,000 aggregate limit.
- B) $500,000 is the cap for health benefit plans under G.S. 58-62-21(d)(2a), not the aggregate life cap.
- D) North Carolina uses fixed dollar caps, not a proportional or percentage recovery rule.
Memory hook
One life, one cap: three hundred thousand, cash values included.