Key Takeaways
- The North Dakota Life and Health Insurance Guaranty Association protects policyholders when insurers become insolvent
- Coverage limits are \$300,000 for life insurance death benefits and \$100,000 for cash values
- 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
North Dakota Life and Health Insurance Guaranty Association
The North Dakota Life and Health Insurance Guaranty Association protects North Dakota residents when life and health insurance companies become insolvent.
Purpose and Function
The Association was established under North Dakota law 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
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
The Association 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 |
Aggregate Limits
The Association has aggregate limits per individual that cap total protection across all policy types.
What Is Covered
The Association covers:
Covered Policies
- Individual life insurance
- Group life insurance (North Dakota residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
- Supplemental contracts
Not Covered
- Policies from insurers not licensed in North Dakota
- Policies from insurers not members of the Association
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
Funding
The Association 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 guaranty association coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by the association
- Compare guaranty association 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.
Consumer Resources
The North Dakota Insurance Department provides consumer resources:
- Phone: (701) 328-2440
- Toll-free: (800) 247-0560
- Website: www.insurance.nd.gov
What is the maximum death benefit coverage provided by the North Dakota Guaranty Association for a life insurance policy?
Can a North Dakota insurance producer use guaranty association coverage as a selling point?
What is the maximum annuity coverage provided by the North Dakota Guaranty Association per contract owner?
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