What is the purpose of the Life and Health Insurance Guaranty Association?

The Life and Health Insurance Guaranty Association serves a critical role in protecting policyholders by ensuring that they continue to receive coverage in the event their insurance company becomes insolvent. This means that if an insurance provider fails—due to bankruptcy or other financial issues—this association steps in to cover the claims of policyholders, guaranteeing that individuals are not left without the benefits they are entitled to under their policies.

This safety net helps bolster trust in the insurance industry, knowing that there are mechanisms in place to protect consumers from potential losses related to their life and health insurance contracts. By maintaining coverage premiums and benefits even when an insurer cannot fulfill its obligations, the association helps maintain stability within the insurance marketplace, which is essential for the financial security of policyholders.