Key Takeaways
- MLIGA protects Mississippi policyholders when insurers become insolvent
- Coverage limits are \$300,000 for life insurance death benefits and \$100,000 for cash values
- Major medical health insurance coverage is limited to \$500,000 per individual
- Annuity coverage is limited to \$250,000 per contract owner
- Producers cannot use guaranty association coverage as a selling point
Mississippi Life and Health Insurance Guaranty Association
The Mississippi Life and Health Insurance Guaranty Association (MLIGA) protects Mississippi residents when life and health insurance companies become insolvent (unable to pay claims).
Purpose and Function
MLIGA was created by the Mississippi legislature in 1985 to:
- Protect policyholders of insolvent insurers
- Continue coverage or pay claims up to limits
- Funded by assessments on member insurers
- Operates under state law supervision
Since 1985, MLIGA has handled over 70 insolvencies, paying out over $125 million in benefits to policyholders.
How It Works
When an insurer becomes insolvent:
- State takes over - Insurance Commissioner places insurer in liquidation
- MLIGA activates - Association takes responsibility for covered policies
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
Coverage Limits
MLIGA provides coverage up to specific limits:
Life Insurance
| Benefit Type | Maximum Coverage |
|---|---|
| Death Benefit | $300,000 per insured life |
| Cash Surrender Value | $100,000 per insured life |
Annuities
| Benefit Type | Maximum Coverage |
|---|---|
| Present Value | $250,000 per contract owner |
| Multiple Annuities | $250,000 total per owner |
Health Insurance
| Coverage Type | Maximum Coverage |
|---|---|
| Major Medical | $500,000 per individual |
| Other Medical | $100,000 per individual |
| Long-Term Care | $300,000 per individual |
Unallocated Group Annuities
| Benefit Type | Maximum Coverage |
|---|---|
| Unallocated Benefits | $5,000,000 per contract owner |
What Is Covered
MLIGA covers:
Covered Policies
- Individual life insurance
- Group life insurance (Mississippi residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
- Supplemental contracts
Not Covered
- Policies from insurers not licensed in Mississippi
- Policies from insurers not members of MLIGA
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
Funding
MLIGA is funded by assessments:
- Member insurers pay assessments
- Assessments based on premium volume
- May be passed through to policyholders
- Recouped through rate adjustments
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use MLIGA coverage as a selling point
- Advertise MLIGA protection
- Imply policies are "guaranteed" by the association
- Compare MLIGA to FDIC insurance
Required Disclosures
- Cannot misrepresent guaranty association coverage
- Must provide accurate information if asked
- Cannot suggest coverage exceeds actual limits
Exam Tip: Remember that producers CANNOT use guaranty association coverage as a selling point. This is a frequently tested rule.
Claim Process
When an insurer becomes insolvent:
- Policyholder notified by liquidator
- Coverage assessed - MLIGA reviews policies
- Benefits continued or transferred to healthy insurer
- Claims processed within coverage limits
What is the maximum death benefit coverage provided by MLIGA for a life insurance policy?
Can a Mississippi insurance producer use MLIGA coverage as a selling point?
What is the maximum annuity coverage provided by MLIGA per contract owner?
What year was the Mississippi Life and Health Insurance Guaranty Association created?
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