The Life and Health Insurance Company Guaranty Corporation of New York

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Frequently Asked Questions

1. What is the Life Insurance Company Guaranty Corporation of New York?

   The Life and Health Insurance Company Guaranty Corporation of New York (the New York Guaranty Corporation) was created by the New York Legislature in 1985 to protect New York state residents who are policyholders and beneficiaries of policies issued by an impaired or insolvent life and health insurance company, up to specified limits. All life and health insurance companies licensed in New York to write life and health insurance are required, as a condition of doing business in the state, to be members of the guaranty corporation. If a member company becomes impaired or insolvent, money to continue coverage and pay claims is obtained through assessments of the guaranty corporation's other member insurance companies. All 50 states, the District of Columbia, and Puerto Rico have life insurance guaranty associations or corporations.

2. Who is protected?

   The New York Guaranty Corporation covers individual policyholders or annuity holders and their beneficiaries, persons holding certificates of insurance issued under group insurance policies or group annuities, payees under structured settlement annuities, and employers or others who own group annuity contracts or funding agreements. Limits on benefits and coverage are established by state law. For more information about coverage or if you have a lost or old policy, call us at 212-202-4243 or email us at info@nylifega.org.

3. Does the Guaranty Corporation cover health insurance?

   The guaranty corporation always covered health insurance policies issued by life insurance companies but in 2023 the law was changed to expand coverage to health insurance issued by health insurers including long term care within the statutory limits. Please see "Additional Information" tab for details.

4. What contracts are covered?

   Generally, individual and group life insurance policies, health insurance policies, annuities, and funding agreements issued by life and health insurance companies licensed to do business in New York State are covered by the New York Guaranty Corporation. If you have specific questions about whether a particular contract would be covered or if you have a lost or old policy call us at 212-202-4243 or email us at info@nylifega.org.

   Coverage is limited by the terms of the Life and Health Insurance Company Guaranty Corporation of New York Act (a link to the Act can be found in the Additional Info section).

   Certain types of insurance issued by non-life insurance companies--such as automobile, homeowners, professional liability, medical malpractice, workers' compensation, etc.--may be protected by the New York Property/Casualty Insurance Security Fund. That guaranty fund can be reached at:

   New York Property/Casualty Insurance Security Fund
   c/o Liquidation Bureau, New York State Department of Insurance
   110 William Street
   New York, NY 10038
   Telephone: 212.341.6400

5. What happens when my insurance company becomes insolvent?

   In most cases, the New York Guaranty Corporation will continue coverage as long as premiums are paid or cash value exists. It may do this directly, or, most often, it may transfer the policy to another insurance company. In any case, policyholders should continue making premium payments if they are obligated to do so to keep their coverage in force. If you have questions about the status of a particular life or health insurance company or you have a lost or old policy call the Guaranty Corporation at 212-202-4243 or email us at info@nylifega.org.

6. How is policy coverage determined?

   Coverage is determined by New York Insurance law and the terms of the insurance policy at the time the guaranty corporation is activated to provide protection (when the member insurer is found to be insolvent and ordered liquidated by a court, or is declared impaired and placed in receivership by the New York Superintendent of the Department of Financial Services ). In light of changes in the law and the dramatic variations in policy language, the New York Guaranty Corporation cannot make statements regarding coverage of a specific policy unless it is a policy with a company for which the New York Guaranty Corporation has been activated to provide protection, however, we can provide general information about how coverage would be provided by calling us at 212-202-4243 or emailing us at info@nylifega.org.

7. If I move to another state after purchasing a policy, will I still have guaranty association coverage? If so, who will provide it?

   Guaranty association protection is generally provided by the association in your state of residence at the date of the liquidation order regardless of where your policy was purchased. All 50 states, the District of Columbia, and Puerto Rico have life insurance guaranty associations or corporations. Policyholders who reside in states where the insolvent insurer was not licensed are covered, in most cases, by the guaranty association of the state where the failed company was domiciled. In addition, if you were a resident of New York when you purchased the policy, the New York Guaranty Corporation may also participate in providing you coverage up to New York’s statutory limits.

8. I bought my life insurance policy or annuity contract when I lived in New York, but now I live in another state. Am I protected by the New York Guaranty Corporation?

   As long as you were a resident of New York at the time of the purchase and your insurer was licensed here as a life or health insurance company, you are protected up to the statutory limits of New York’s guaranty association. You may also have protection in your current state of residence that would be coordinated with whatever coverage is provided by New York. All 50 states, the District of Columbia, and Puerto Rico have life insurance guaranty associations or corporations.

9. Are all policies fully protected?

   Not always. If your insurance company fails, the maximum amount of protection provided by the guaranty corporation for all policy types in the aggregate, no matter how many policies of the same or different types you bought from your company, is $500,000 per life. This aggregate limit applies to life insurance death benefits, life insurance cash surrender values, individual health insurance claims, individual annuity benefits, and allocated group annuity benefits. The limit for unallocated group annuity and funding agreement benefits is $1,000,000 per contract. No limit applies to group health insurance benefits. If an included policy not in payout status is jointly owned, coverage would generally be subject to a single limit ($500,000 for an annuity). For payout annuities where payments are based upon the lives of two individuals (eg., joint and survivor annuities) coverage would be extended to each individual. If you have an old or lost policy and you do not know if the company was licensed in New York call us at 212-202-4243 or email us at info@nylifega.org.

   New York Guaranty Corporation coverage does not extend to that portion of a policy or annuity where investment or other risk is borne by the policyholder and is not guaranteed by an insurer. Please note that the New York Guaranty Corporation only provides coverage for policies issued by life insurance companies licensed by the State of New York.

10. For example, if I own three annuities worth $200,000 each from the same life insurer and that insurance company fails, how much is protected?

    The total protection per owner per member company is $500,000 for all annuity contracts. As a result, if an individual owned three $200,000 annuities with the same insolvent insurance company, the individual would have total New York Guaranty Corporation coverage of only $500,000. The value in excess of this statutory coverage limit would be eligible for submission as a policyholder claim in the receivership, and the annuity holder may receive distributions as the company's assets are liquidated by the receiver.

11. What will happen to my insurance coverage if the guaranty corporation becomes liable for my policy?

    Protection can be provided in one of several different ways. For example, a financially sound insurer may take over the troubled company's policies and assume the responsibility for continuing coverage and paying covered claims. The New York Guaranty Corporation may provide coverage directly by continuing the insurer's policies or issuing replacement policies with other guaranty associations. In some situations, the New York Guaranty Corporation may work with other state guaranty associations to develop an overall plan to provide protection for the failed insurer's policyholders. The amount of protection provided and when you receive it may depend on the particular arrangement worked out for handling the failed insurer's obligations.

    For group life or group health insurance issued by a New York licensed life or health insurer, state law allows the guaranty association to continue your coverage only for a limited time: 180 days from the date the insurer was placed under an order of liquidation. This time period may be extended under certain circumstances.

12. When might the guaranty corporation provide benefits?

    If your insurer is no longer able to fulfill its obligations, ongoing benefit payments to you may be reduced or suspended by the courts in order to sort out the affairs of the financially troubled insurer. As a result, you may have to wait many months before the guaranty association is activated to provide benefit payments. Hardship provisions may be instituted by the receiver to continue benefit payments.

13. What is NOT protected by the guaranty corporation?

    The New York Guaranty Corporation provides no protection for:

    - policies and contracts with insurers not licensed to do business in New York;
    - benefits the insurer does not guarantee or for which the policyholder bears the risk (such as the non-guaranteed portion of a variable life insurance or annuity contract);
    - self-insured employer plans;
    - interest rates found by a court to be clearly excessive;
    - policies and contracts issued outside the United States (or issued for delivery outside the United States) to the extent they cover persons not citizens or permanent residents of the United States;
    - policies and contracts payable other than in United States dollars; and
    - policies and contracts other than life, health or accident insurance, annuities, or funding agreements.

    Certain less commonly known insurance policies and arrangements not listed here are also not protected. If you are unsure about whether your policy or contract is excluded from guaranty corporation protection or if you have a lost or old policy, call us at 212-202-4243 or email us at info@nylifega.org.

14. I have a variable annuity or variable life insurance contract, in which my funds are invested separately from those of the life insurance company. What kind of protection do I have?

    If the separate account contract guarantees a minimum return, the contract holder is protected by the New York Guaranty Corporation , but only for the portion of the contract that is guaranteed. The guaranty corporation provides no protection for funds invested in a separate account for which the contract holder bears the entire risk of gains or losses under the contract. However, assets in a separate account would normally retain their separate status in the event of the insolvency of the issuing insurer and could not be used to pay that insurer's other debts and obligations that do not arise out of the business of the separate account.

15. How will I know if my life or health insurance company has failed or is unable to fulfill its obligations to its policyholders?

    You will receive a notification from the receiver and/or the New York Guaranty Corporation if your insurance company is found to be insolvent and ordered liquidated.

16. How can I find out if my company is licensed in New York?

    Please call the New York Guaranty Corporation at 212-202-4243 or email us at info@nylifega.org to determine the licensing status of a particular company in New York or if you have a lost or old policy. Please note that companies must be licensed as life or health insurance companies in New York in order for their policies to be covered by the New York Guaranty Corporation.

17. Why hasn't my agent or company told me more about the Life Insurance Company Guaranty Corporation of New York?

    The law prohibits insurance agents and companies from using the New York Guaranty Corporation in any advertising. The guaranty corporation is not and should not be a substitute for your prudent selection of an insurance company that is well managed and financially stable. Agents are prohibited by statute from using this website or the existence of the guaranty corporation as an inducement to purchase insurance. For more information, see our Advertising Prohibition in the Additional Info section.

18. Where can I find more information?

    Our Additional Info page contains links to other useful sites. If you still have questions after reviewing the information on our website , please call us at 212-202-4243 or email us at info@nylifega.org.

19. Where can I get advice on purchasing life, health, or annuity products?

    The guaranty corporation does not provide financial advice or comment on the financial condition of any particular company. You can obtain advice from captive insurance agents, independent insurance brokers, and rating agencies. Generally, captive agents sell products from a single insurer. Brokers usually can sell the products of multiple insurers.

    Rating agencies assign comparative ratings to insurers based on various criteria. Most rating agencies are paid by the insurer to do an assessment examination and to issue a rating. This is the case with the largest and most well-known agencies, such as Standard and Poor’s, A. M. Best, Moody’s, and Fitch Ratings. Since the companies pay to have themselves rated, those ratings are generally available to the public without charge. One rating agency does not accept payment from the insurer being rated—TheStreet.com. You must pay to obtain its rating results.

    You may also wish to contact your state insurance department regarding information on a particular company.

20. Are you a State agency?

    No. The New York Guaranty Corporation is a private entity, with its membership made up of all the life and health insurers licensed in the state (in fact, under state law an insurer must be a member of the association to be licensed to do business). The corporation was created by the legislature to serve as a safety net (subject to statutory limits) for residents should their life or health insurer fail. By creating the corporation, the legislature was able to ensure continued coverage to residents affected by their insurer’s failure. The corporation does work in cooperation with the Department of Financial Services in fulfilling its role of protecting residents whose insurance company is being liquidated.

21. How can I determine the financial soundness of my insurance company?

    Consumers can contact us at 212-202-4243 or email us at info@nylifega.org to determine if an insurance company is licensed to write business in New York (see "How can I find out if my company is licensed in New York?" above). Consumers can also check the financial strength ratings of the company, which are issued by various ratings agencies (see "Where can I get advice on purchasing life, health, or annuity products?" above).

22. If my company is in the process of rehabilitation/conservation and I have an emergency and need to withdraw monies from my annuity, what is the process?

    Surrenders and loans may be allowed on a case-by-case basis for genuine hardship situations upon written application to the Receiver. Hardship circumstances and procedures will differ from company to company and (after liquidation) from guaranty corporation to guaranty corporation. Examples of hardship cases may include (1) terminal illness or permanent disability; (2) substantial medical expenses not covered by medical insurance; (3) financial difficulties resulting in inability to pay for essential life support needs like food and shelter; (4) imminent removal from a hospital, nursing home, or other medical care facility due to inability to pay; (5) imminent bankruptcy; and (6) immediate need for college tuition payments for a dependent child.

23. Is long-term-care insurance covered by the guaranty corporation?

    Yes, long-term-care insurance is typically considered health insurance and covered by the New York Guaranty Corporation, but only if it is issued by a life or health insurance company licensed to do business in New York.

24. Are variable annuities covered by the guaranty corporation?

    Generally speaking, benefits the insurer does not guarantee or for which the policyholder bears the risk (such as the non-guaranteed portion of a variable life insurance or annuity contract) are not covered; a variable annuity contract with general account guarantees will be eligible for New York Guaranty Corporation coverage, subject to applicable limits and exclusions on coverage. However, specific questions regarding coverage will be determined by the New York Guaranty Corporation based on the terms of the contract, other relevant facts, and the New York Guaranty Corporation law in effect at the time of liquidation.

25. If my company is liquidated, do I have to file a claim with the corporation?

    If your insurance company is liquidated, you will receive a notice from the court-appointed Receiver (typically the Insurance Commissioner of the company’s state of domicile), who will oversee the liquidation of the company and inform you of any new claims procedures. There may be no change in the claims submission process—guaranty corporations, working with the Receiver, sometimes continue processing claims using the liquidated company’s existing claims staff if that will maximize the speed and efficiency with which claims are processed. In other cases, the corporations process the claims themselves or use an independent processing company, known as a third-party administrator, to process claims. In any event, you will be notified of the ongoing claims process. If you wish to continue coverage, you must continue to pay the premium required by your policy. If you have a lost or old policy and you are uncertain about the status of the company, call the New York Guaranty Corporation at 212-202-4243 or email us at info@nylifega.org.

26. Should I continue to pay my premiums?

    Yes. If you are paying premiums to your company and wish to keep your coverage in place, you must continue to do so—those premiums go to the guaranty corporation providing you continuing coverage. If you stop paying premiums, your insurance coverage may be terminated.

27. Is my company covered by the guaranty corporation?

    The New York Guaranty Corporation provides coverage to owners of covered policies issued by member insurers (life and health insurers licensed to write business in the state). To determine if a company is licensed to write business in New York or if you have a lost or old policy, you may call the Guaranty Corporation at 212-202-4243 or email us at info@nylifega.org.

28. What happens if the benefits promised in my policy are greater than the coverage limits provided by the guaranty association?

    The New York Guaranty Association, in conjunction with the Receiver, may be able to negotiate a transfer of a company’s policies, up to the amount of the guaranty association benefit limits, to a financially sound insurer. If an association administers claims against the policy and the benefit limits are reached, any claim in excess of that limit may be submitted as a policyholder-level claim against the estate of the failed insurance company, and the contract holder may receive distributions as the company’s assets are liquidated by the Receiver.

29. Are Retained Asset Accounts (RAAs) covered by the guaranty corporation?

    Yes, generally speaking, RAAs which are accounts established by an insurer to deposit policy benefits are covered by the New York Guaranty Corporation on the basis that they are considered a contract supplemental to the insurance contract.

30. Where does the guaranty corporation get the money it needs to pay policyholder benefits?

    The New York Guaranty Corporation obtains money to continue coverage and pay eligible claims by making assessments of the guaranty corporation's other member insurance companies.

31. How can I locate an old or lost policy?

    Over the years, there are frequent mergers and acquisitions within the life and health insurance industry and old policies are often transferred to new companies. If you have an old policy or lost policy and are unable to get current information about it email us at info@nylifega.org or call 212-202-4243 for assistance.

32. My spouse and I each have an annuity contract worth $500,000. Does the $500,000 limit apply to us jointly?

    No. The limit applies to you and your spouse separately. You and your spouse would have individual protection of up to $500,000 each. The rules are different for single annuities held jointly. If you have questions email us at info@nylifega.org or call 212-202-4243.

33. How are joint annuities covered by the guaranty association?

    The New York Guaranty Corporation covers annuities in an amount up to $500,000 in present value of annuity benefits with respect to “one life,” regardless of the number of policies or contracts. In determining the life (or lives) used to apply the coverage level, there are differences between “Deferred Annuity Contracts” and “Income Annuity Contracts”. In the case of a Deferred Annuity Contract, there is one coverage level even for contracts with multiple annuitants and/or multiple owners. However, if the contract is an Income Annuity Contract, and there are multiple annuitants, then multiple coverage levels will be applied based on the life of each annuitant. On the other hand, jointly “owned” annuities (regardless of whether the contract is a Deferred Annuity or an Income Annuity) are always treated as having a single owner (i.e., the owners are treated as a single unit). Therefore, the existence of multiple owners does not impact the amount of coverage provided. If you questions please call 212-202-4243 or email us at info@nylifega.org.

34. I am a resident of New York and I have a policy issued by an insurance company that is not licensed in New York. Will I receive protection from the New York Guarantee Association if this insurance company becomes insolvent?

    No. The Guaranty Association only protects policies issued by an insurance company licensed to do business in New York. You may, however, be entitled to receive protection from the guaranty association located in the insolvent company's state of domicile. Call us at 212-202-4243 or email us at info@nylifega.org if you have questions.

35. Is my company a member of the New York Guaranty Association?

    Life and health insurance companies licensed to write business in the state are members of the New York Guaranty Association. To determine if a company is licensed to write life, health, or annuity business in New York, you may call us at 212-202-4243 or email us at info@nylifega.org.

36. I have a 401(k) plan with my employer. I have selected a fixed interest option funded by a guaranteed investment contract (GIC) issued by a life insurance company to my employer. Will my invested funds be protected by the Guaranty Association?

    A 401(k) plan is a retirement savings plan in which employees contribute through payroll deductions to a fund to be used for retirement. If the guaranteed investment contract (GIC) does not guarantee annuity benefits with respect to any specific individual identified in the contract, the contract is protected up to a maximum of $1 million per contract holder (usually your employer or a trustee). This $1 million limit applies regardless of the number of employees covered under the 401 (k) plan. If the GIC is allocated to individuals under the contract then individual coverage applies up to the $500,000 limit if the GIC is issued by a licensed New York life insurance company. If you have questions call 212-202-4243 or email us at info@nylifega.org.

37. Does the Guarantee Association protect my Individual Retirement Annuity (IRA)?

    Assuming all the other conditions are met for an annuity, it is protected up to the limit set for an annuity.

38. What is the difference between the Pension Benefit Guaranty Corporation (PBGC) and state guaranty associations?

    The PBGC protects the pension benefits provided by corporate pension plans under the federal pension system (The Employee Retirement Income Security Act - ERISA) while the state guaranty associations protect the policyholders of annuity benefits issued by licensed life insurers.

    Both systems provide high levels of protection—over 90% of promised benefit. The majority of participants are protected at 100% by both systems. In general, insurance regulators impose more rigorous financial controls on the approximately 460 life insurance companies that issue annuities than the ERISA system employs to police the financial health of about 22,000 pension plans. While only five small life insurers have failed since 2008, no operating life insurer with an active block of annuity business failed during this period. By contrast, that same period saw the failure of 931 single-employer pension plans affecting more than 560,000 participants. In general, the PBGC guarantees pension benefits at a higher level than the annuity level that most state guaranty associations guarantee. The PBGC maximum is slightly more than $5,000 per month for a single-life annuity starting at age 65 (for 2015 plan terminations); while most guaranty associations use a $250,000 present-value maximum with respect to one life ($500,000 in New York). On the other hand, the insurance receivership process, in tandem with the guaranty system, allows most individuals to benefit from a substantially higher share of an insolvent annuity issuer’s assets than would be available from the assets of a failed pension plan.

    The pension system has a significant protection gap not shared by the insurance system: ERISA provides no authority to regulate the financial health of the employers that sponsor pension plans and remain ultimately responsible for their funding.

    If you have questions call us at 212-202-4243 or email us at info@nylifega.org.

39. What is the difference between the Federal Deposit Insurance Corporation (FDIC) and state guaranty associations?

    The FDIC is a federal program that protects the bank deposits of bank customers up to $250,000 per deposit. The state guaranty associations protect life, annuity and health insurance policyholders of life insurance companies up to specified state limits ($500,000 in New York).

    If you have questions call us at 212-202-4243 or email us at info@nylifega.org.

40. If my company is terminating its pension plan and replacing it with an annuity would I be covered by the guaranty association?

    If you are a resident of New York and the insurance company issuing the annuity is a licensed life insurance company in New York, the annuity would be covered by the New York guaranty association.
    
    Please call us at 212-202-4243 or email us at info@nylifega.org to review the details of your plan and determine the licensing status of the insurer.

41. Do guaranty association benefit levels put a limit on the benefits I can receive for my policy?

    Guaranty association coverage acts as a "floor" and not a "ceiling." If your policy benefits are less than or equal to the guaranty association benefit level , your policy will be fully covered. If your policy benefits are more than the guaranty association benefit level, you are guaranteed at least that level of coverage. Any amount above the guaranty association benefit level becomes a claim against the estate of the failed insurer.

    For example, if you have an annuity providing for $600,000 in present value of annuity benefits and the benefit level is $500,000, you are guaranteed $500,000 in benefits from the state guaranty association. The remaining $100,000 becomes a claim against the estate of the insurer. If the insurer has enough assets to cover 50% of policyholder claims, you would receive $50,000 (50% of $100,000) from the insurer’s estate, for a total of $550,000 ($500,000 in guaranty association coverage and $50,000 from the insurer’s estate).

    If the failed insurer’s estate has no assets remaining (which is unusual), then the guaranty association coverage would be the only benefits you receive.

    If you have questions or need more information call 212-202-4243 or email us at info@nylifega.org.

42. What if a person is not a resident of any U.S. state?

    Under the laws of most states, U.S. citizens living in foreign countries or U.S. territories, possessions, or protectorates without a guaranty association will be considered residents of the state of domicile of the insurer that issued the policy or contract. Please call 212-202-4243 or email info@nylifega.org if you have questions.