Glossary
Guaranty association
A state safety net, funded by assessments on insurers, that continues coverage or pays claims up to set limits when a life or annuity insurer fails.
Also called: state guaranty association, life and health insurance guaranty association, guaranty fund
A life and health insurance guaranty association protects policyholders when an insurer becomes insolvent and is ordered into insurer liquidation. All 50 states, the District of Columbia and Puerto Rico have one. Insurers licensed in a state must belong to its association, which uses the failed company's remaining assets plus assessments on the surviving member insurers to pay claims and continue coverage. NOLHGA, the national organization, coordinates multistate failures.
Coverage follows your state of residence and has limits. According to NOLHGA, most states cover up to $300,000 in life insurance death benefits, $100,000 in cash surrender value and $250,000 in annuity benefits per person per failed insurer, usually subject to an overall cap. Some states, such as New York and Washington, set higher limits. Usually the association transfers policies to a healthy insurer, so coverage simply continues.
Amounts above the limits become claims against the failed insurer's estate, which may pay only part. State law generally bars agents from using guaranty association coverage as a sales pitch, so check the limits yourself with the state guaranty association coverage lookup. See state life and health guaranty associations and what happens if your life insurance company fails.
Last reviewed October 4, 2026