For a person to potentially qualify for coverage under the Life & Disability Guaranty Fund (ALDIGF):
- they must be a resident of Arizona at the time of the company becoming insolvent (certain exceptions apply), and
- the insolvent company must have been licensed in Arizona.
BENEFITS AND COVERAGE PER A.R.S. § 20-682
The protection provided by the Life & Disability Guaranty Fund is based on Arizona law and the language of the relevant policy(ies). The most it is able to pay in benefits is:
1. The lesser of the limits of the policy/value of the annuity, OR
a. With respect to one life:
i. $300,000 in life insurance death benefits but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance
ii. $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values
2. With respect to one life in disability insurance benefits:
a. $100,000 for coverages not defined as disability income insurance or basic hospital, medical and surgical insurance or major medical insurance or long-term care insurance.
b. $300,000 for disability income insurance
c. $300,000 for long-term care insurance
d. $500,000 for basic hospital, medical and surgical insurance or major medical insurance
3. With respect to each payee of a structured settlement annuity (or beneficiary), an aggregate of $250,000 in present value annuity benefits, including net cash surrender and new cash withdrawals.
4. The Guaranty Fund cannot expend more than the following, with respect to any one life:
a. An aggregate of $300,000 in benefits with respect to any one individual as outlined above, except with respect to benefits inclusive of basic hospital, medical and surgical insurance and major medical insurance, in which case the aggregate may not exceed $500,000 with respect to any one individual.
b. $5,000,000 in benefits for one owner of multiple, non group, life insurance policies, regardless of the number of policies/contracts held by the owner.
There are certain policies and contracts may not be fully covered. For example, coverage does not extend to any portion(s) of a policy or contract that the insurer does not guarantee, such as certain investment additions to the account value of a variable life insurance policy or a variable annuity contract.
Should your Life or Disability Insurer become insolvent, it is very important to continue to pay your premiums if any are due. Those premiums will generally go to the Guaranty Funds that are continuing to provide coverage. If you stop paying your premiums, your insurance benefits may be terminated. Information will generally be mailed to you to keep you informed about the company’s insolvency and your policy. As a result, it is important to update your Guaranty Fund and the Receiver of the insolvent company if you move or your contact information changes.
Additional information about insurers going out of business, guaranty fund benefits, and more is available online at the website of the National Organization of Life & Health Insurance Guaranty Fund Associations (NOHLGA). Please visit their Frequently Asked Questions page at the following link: NOHLGA FAQs