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THE LIFE AND HEALTH INSURANCE Frequently Asked Questions |
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COMMONLY
ASKED QUESTIONS ABOUT THE LIFE What is the Life and Health Insurance Protection Association? Why was the Life and Health Insurance Protection Association formed? What Colorado law gives authority to the Life and Health Insurance Protection Association? Who
does the Life and Health Insurance Protection Association help? Where does the Association get its funds? Does it matter where the policyholder purchased the policy? Are there financial limits to what the Life and Health Insurance Protection Association will pay? Is the Colorado Association affiliated with a national organization? How often do the members of the Colorado Association meet? Who serves on the Board of Directors? How many member companies are in the Association? Can the Life and Health Insurance Protection Association tell an individual about the financial security or policies for issue on a specific insurance company? What
is the Life and Health Insurance Protection Association?
The Life and Health Insurance
Protection Association is a nonprofit organization made up of member
companies from the life and health insurance industry that are
licensed to sell annuities, life and/or health insurance products in
Colorado.
Why
was the Life and Health Insurance Protection Association formed?
The Colorado Legislature
enacted a law (The Life and Health Insurance Protection Association
Act) authorizing the formation of this organization to assist Colorado
residents who hold annuities, life, or health insurance policies
issued by insurance carriers who become insolvent.
What
Colorado law gives authority to the Life and Health Insurance
Protection Association?
House bill 91-1325, Article
20, Life and Health Insurance Protection Association Act, which became
law on July 1, 1991.
Who
does the Life and Health Insurance Protection Association help?
Except under certain very
restrictive conditions, in order to be covered by the Life and Health
Insurance Protection Association, a person must be a resident of
Colorado. In addition,
assistance is not available if the insurer was unable to meet its
obligations or was declared insolvent by a court before July 1, 1991.
Where
does the Association get its funds?
The Association charges annual
fees to its members. It
will also assess the members following a determination that certain
insurers’ policies will be covered.
These fees are then used to pay the claims of Colorado
residents who hold policies issued by life and health insurance
companies which become insolvent or can no longer meet their
contractual obligations on or after July 1, 1991.
Does
it matter where the policyholder purchased the policy?
No.
However, the insurer must have been licensed to sell products
in Colorado, and with certain exceptions, the claimant must be a
resident of Colorado.
Are
there financial limits to what the Life and Health Insurance
Protection Association will pay?
Yes.
The Association provides coverage up to $300,000 for life
insurance benefits; $100,000 in net cash surrender or withdrawal for
life insurance; $100,000 in health insurance benefits; $300,000 for
disability insurance; $500,000 for basic hospital, medical and
surgical, or major medical insurance; and $100,000 in present value of
annuity benefits, including net cash surrender and net cash withdrawal
values. The Association
does not provide coverage for unallocated annuities. The Association
cannot expend more than $300,000 in total, with respect to any one
life, except that with respect to benefits for basic hospital, medical
and surgical, or major medical insurance, the aggregate liability of
the Association shall not exceed $500,000 with respect to any one
individual.
Is
the Colorado Association affiliated with a national organization?
Yes.
The Colorado Association is a member of the National
Organization of Life and Health Guaranty Associations (NOLHGA) whose
objective is to facilitate greater coordination, cooperation, and
collective action by state guaranty associations.
How
often do the members of the Colorado Association meet?
The member companies meet
annually. The Board of
Directors of the Life and Health Insurance Protection Association meet
on an as-needed basis and annually following the annual meeting of the
member companies.
Who
serves on the Board of Directors?
The member companies of the
Association elect the nine-member Board.
How
many member companies are in the Association?
Over 1,000 members.
Can
the Life and Health Insurance Protection Association cancel a policy
upon the request of a Colorado policyholder?
No.
The Association cannot cancel a policy with any insurance
company. Further, the
Association does not have access to information regarding policyholder
claims. The policyholder
must contact the insurance company directly to cancel a policy,
acquire information about claims, or receive general information about
the insurance company.
Can
the Life and Health Insurance Protection Association tell an
individual about the financial security or policies for issue on a
specific insurance company?
No.
The Association deals only with insolvent or “troubled”
companies and, therefore, does not provide financial information for
solvent companies. Company
ratings and other information may be obtained from various sources at
the public library or from the Colorado Division of Insurance.
For
more information, please see the “contact us” section.
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