What is the Illinois Life & Health Insurance Guaranty Association?
The Illinois Life and Health Insurance Guaranty Association was established to provide protection in the event that your life, annuity or health insurance company becomes financially unable to meet its obligations and is taken over by its Insurance Department.
If this should happen, the Illinois GA will typically provide protection, in accordance with Illinois law, with funding from assessments paid by other insurance companies.
What happens when my insurance company goes out of business?
The Illinois GA is authorized to provide protection in a variety of ways depending on the line of business.Some examples include paying claims, continuing coverage as long as premiums are paid, or transferring policies to another insurance company.
Who is covered by the Illinois GA?
In general, the Illinois GA provides coverage to residents of Illinois. However, there are some circumstances in which a non-resident may be entitled to coverage and some circumstances in which a resident of Illinois will not be entitled to coverage.
Residency will be determined on the date the insurer is determined to be impaired or insolvent. If a person satisfies the Illinois residency test as of that date, applicable protection is provided even if the person moves outside of Illinois.
Is my insurer a member of the Illinois GA?
The Illinois GA provides coverage to owners of covered policies issued by member insurers (life, health, health maintenance organizations, and annuity insurers licensed to write business in the state).
To determine if a company is licensed to write business in Illinois, you may call the Illinois Department of Insurance at 866-445-5364 or 217-782-4515. The Department maintains complete and current records of all insurance companies and health maintenance organizations licensed to do business in Illinois. Information about companies licensed to write business in Illinois may also be obtained from the Illinois Department’s website.
How is policy coverage determined following an insolvency?
Coverage is determined by Illinois law and policy language at the time the member insurer is found to be insolvent and ordered liquidated by a court. At this time, the Illinois GA is activated to provide protection.
In light of changes in the law and the dramatic variations in policy language, the Illinois GA cannot make statements regarding coverage of a specific policy unless it is a policy with a company which has been ordered liquidated by the court and for which the Illinois GA has been activated to provide protection.
What protections are provided by the Association?
The basic protections provided by the Illinois GA for the insured of a member insurer which is found to be insolvent are:
- $300,000 in death benefits
- $100,000 in cash surrender or withdrawal values
- $500,000 in health benefit plan benefits*
- $300,000 in disability insurance benefits
- $300,000 in long-term care insurance benefits
- $100,000 in other types of health insurance benefits
- $250,000 in withdrawal and cash values
*The maximum amount of protection for each individual, regardless of the number of policies or contracts, is $300,000, except special rules apply with regard to health benefit plan benefits for which the maximum amount of protection is $500,000.
Refer to the Act (215 ILCS 5/531.03) for other policies and contracts, or portions thereof, which are excluded from coverage.
Is long-term-care insurance covered by the Illinois GA?
Yes, long-term-care insurance is typically considered health insurance and covered by the Illinois GA.
What happens if the benefits promised in my policy are greater than the coverage limits provided by the Illinois GA?
You will have a claim against the insolvent company’s estate for the amount owed to you and not paid by the Illinois GA.
Are there limitations on the amount of interest the Illinois GA is obligated to pay or credit with respect to covered policies or contracts that provide for guaranteed minimum interest rates?
Yes. There are a variety of limitations set forth by law. For example, some interest rates promised in a policy or contract may be rolled back when measured against Moody's Corporate Bond Yield Average.
Are there other limitations on the Illinois GA's liability?
Yes. For example, the Illinois GA's liability is never greater than the benefits promised by the insolvent insurer.
How will I know if my life or health insurance company is insolvent?
You will receive a notification from the Receiver (the state insurance department overseeing the company) if your insurance company is found to be insolvent and ordered liquidated.
Where can I get advice on purchasing life, health, or annuity products?
The Illinois GA does not provide advice on the purchase of insurance products, nor does the Illinois GA provide financial advice or comment on the financial condition of any particular company. You may contact the Illinois Department of Insurance regarding information on a particular company and insurance products in general.
Are you a State agency?
No. The Illinois GA is a private entity, with its membership made up of all the life and health insurers and health maintenance organizations licensed in the state. The Illinois GA was created by the legislature to serve as a safety net (subject to statutory limits) for Illinois residents should their life or health insurer or health maintenance organization fail.