Key Takeaways
- CLHIGA protects Connecticut policyholders when insurers become insolvent
- Coverage limits include \$500,000 for life insurance death benefits (higher than most states)
- Health insurance and disability coverage is limited to \$500,000 per individual
- Annuity coverage is limited to \$250,000 in present value
- Producers cannot use guaranty association coverage as a selling point
Connecticut Life and Health Insurance Guaranty Association
The Connecticut Life and Health Insurance Guaranty Association (CLHIGA) protects Connecticut residents when life and health insurance companies become insolvent.
Purpose and Function
The guaranty association:
- Protects policyholders of insolvent insurers
- Continues coverage or pays claims up to limits
- Is funded by assessments on member insurers
- Operates under state law supervision
How It Works
When an insurer becomes insolvent:
- State takes over - Insurance Commissioner places insurer in liquidation
- Association activates - Takes responsibility for covered policies
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
Coverage Limits
CLHIGA provides coverage up to specific limits (Connecticut has higher limits than many states):
Life Insurance
| Benefit Type | Maximum Coverage |
|---|---|
| Death Benefit | $500,000 per life |
| Cash Surrender Value | $500,000 per policy |
Annuities
| Benefit Type | Maximum Coverage |
|---|---|
| Present Value | $250,000 per contract |
Health Insurance
| Coverage Type | Maximum Coverage |
|---|---|
| Health Benefits | $500,000 per individual |
| Disability Income | $500,000 per individual |
| Long-Term Care | $500,000 per individual |
Exam Tip: Connecticut has higher guaranty association limits than most states ($500,000 vs. $300,000 for many coverage types).
What Is Covered
Covered Policies
- Individual life insurance
- Group life insurance (Connecticut residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
Not Covered
- Policies from insurers not licensed in Connecticut
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use guaranty association coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by the association
- Compare to FDIC insurance
- Use guaranty coverage to induce sales
Exam Tip: Remember that producers CANNOT use guaranty association coverage as a selling point. This is a frequently tested rule.
What is the maximum death benefit coverage provided by the Connecticut guaranty association for a life insurance policy?
Can a Connecticut insurance producer use guaranty association coverage as a selling point?
How does Connecticut's guaranty association death benefit limit compare to most other states?
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