A Texas resident owns an individual life policy with a death benefit of $500,000. The insurer becomes insolvent and is ordered liquidated. Under the Texas Life and Health Guaranty Association, what is the maximum amount payable for the death benefit?

Why A is correct

Under TIC Chapter 463, the Texas Life and Health Guaranty Association covers the life insurance death benefit of a covered policy up to $300,000 per life for each insolvent insurer. The $500,000 face amount is therefore not fully covered, and the uncovered portion remains a claim against the insolvent estate rather than against the Association. Practical consequence: the Association's limits apply per insolvent company, so coverage held with a different insurer is unaffected.

Why the other options are wrong

• B) $100,000 is the Association's limit for the net cash surrender or withdrawal value of a life policy, not for the death benefit.
• C) $250,000 is the per-life limit for the present value of an individual annuity, not for a life insurance death benefit.
• D) The Association does not guarantee the full face amount; the $300,000 per-life limit applies no matter how large the policy is.

Memory hook

Death benefits are capped at $300,000 per life, because the Association caps rather than fully replaces.