Key Takeaways
- PLHIGA protects Pennsylvania 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 in present value
- Producers cannot use guaranty association coverage as a selling point
Pennsylvania Life and Health Insurance Guaranty Association
The Pennsylvania Life and Health Insurance Guaranty Association (PLHIGA) protects Pennsylvania residents when life and health insurance companies become insolvent (unable to pay claims).
Purpose and Function
PLHIGA is a nonprofit association that:
- 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
- PLHIGA activates - Association takes responsibility for covered policies
- Coverage continues - Up to statutory limits
- Claims paid - Benefits paid to policyholders
Coverage Limits
PLHIGA provides coverage up to specific limits:
Life Insurance
| Benefit Type | Maximum Coverage |
|---|---|
| Death Benefit | $300,000 per life |
| Cash Surrender Value | $100,000 per policy |
| Present Value (total) | $300,000 per life |
Annuities
| Benefit Type | Maximum Coverage |
|---|---|
| Present Value | $250,000 per contract |
| Multiple Annuities | $250,000 total per owner |
Health Insurance
| Coverage Type | Maximum Coverage |
|---|---|
| Health Benefits | $500,000 per individual |
| Disability Income | $300,000 per individual |
| Long-Term Care | $300,000 per individual |
Exam Tip: Pennsylvania's life insurance death benefit limit is $300,000, which is lower than some states like California ($500,000). Know your state's specific limits.
What Is Covered
PLHIGA covers:
Covered Policies
- Individual life insurance
- Group life insurance (Pennsylvania residents)
- Annuities
- Health insurance
- Disability income insurance
- Long-term care insurance
- Medicare Supplement insurance
Not Covered
- Policies from insurers not licensed in Pennsylvania
- Policies from insurers not members of PLHIGA
- Self-funded employer plans
- Government programs
- Surplus lines policies
- Amounts above coverage limits
- Investment portions of variable products (beyond guarantees)
Aggregate Limits
Pennsylvania has overall limits per individual:
| Category | Aggregate Maximum |
|---|---|
| All life insurance | $300,000 per life |
| All annuities | $250,000 per owner |
| All health coverage | $500,000 per person |
Funding
PLHIGA 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 PLHIGA coverage as a selling point
- Advertise PLHIGA protection
- Imply policies are "guaranteed" by the association
- Compare PLHIGA to FDIC insurance
- Use guaranty association in sales materials
Required Conduct
- Cannot misrepresent guaranty association coverage
- Must provide accurate information if asked directly
- Cannot suggest coverage exceeds actual limits
- Cannot imply all losses will be covered
Exam Tip: Remember that producers CANNOT use guaranty association coverage as a selling point. This is a frequently tested rule in Pennsylvania and all other states.
What is the maximum death benefit coverage provided by PLHIGA for a life insurance policy?
Can a Pennsylvania insurance producer use PLHIGA coverage as a selling point?
What is the maximum annuity coverage provided by PLHIGA?
You've completed this section
Continue exploring other exams