State RegulationsTX specificDifficulty 1/5
A Texas insurer that issued an individual life policy to a Texas resident is declared insolvent and ordered liquidated. What is the maximum the Texas Life and Health Insurance Guaranty Association will pay on that life death benefit?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 463.101-.205, the Association's coverage for life insurance death benefits is capped at $300,000 for each life, measured per insolvent company. The other limits are often confused with it: $100,000 is the cap on net cash surrender and withdrawal value, $250,000 is the cap on the present value of an individual annuity, and $500,000 is the health benefit cap. Coverage also requires the insured to be a Texas resident on the date of liquidation.
Why the other options are wrong
- A) $500,000 is the cap for basic hospital, medical-surgical and major medical health benefits, not for life death benefits.
- B) $250,000 is the cap on the present value of an individual annuity, not on a life death benefit.
- D) $100,000 is the cap on life net cash surrender and withdrawal value, not on the death benefit.
Memory hook
Life death benefit caps at $300,000 per life, per insolvent company.