How is the Life and Health Insurance Guaranty Association funded?

The Life and Health Insurance Guaranty Association is primarily funded through member companies that are part of the association. This funding model reflects the collaborative efforts of insurance providers to ensure that policyholders are protected in the event that a member company becomes insolvent.

Member companies contribute to the fund based on their market share and the types of insurance products they offer, helping to create a financial safety net for policyholders who might otherwise lose their benefits. This system promotes stability within the insurance market by providing a guarantee that claims can be met even if a company fails, thereby instilling confidence in consumers.

Other options, such as government grants, policyholder fees, or state insurance taxes, do not play a role in funding the Guaranty Association. This structure ensures that the association is driven by industry contributions rather than public funding or additional costs imposed on policyholders.