Regulators are warning that guaranty associations will back only the insurance benefits issued by insurers undergoing liquidation, and not non-insurance obligations such as inflation adjustments.

The Texas Department of Insurance and the National Organization of Life and Health Insurance Guaranty Associations, Herndon, Va., have included that warning in an announcement issued together with Donna Garrett, a special deputy receiver who is helping regulators and NOLHGA oversee 3 troubled companies.

The companies are Lincoln Memorial Life Insurance Company and Memorial Service Life Insurance Company, 2 sister life insurers, and an affiliate, National Prearranged Services Inc., Clayton, Mo.

About 200,000 U.S. consumers are counting on the companies to pay for their funerals, officials estimate.

The parties involved have agreed to the “material provisions” of a liquidation plan and expect to file it with the Texas receivership court within the next few weeks, Texas department and NOHLGA officials report.

The plan calls for participating guaranty associations to cover the Lincoln Memorial and Memorial Service insurance policy death benefits originally promised by the insurers, “notwithstanding that policy loans, assignments, conversions, and other insurance policy transactions not authorized by the consumer may have taken place,” officials say.

“Obligations of prepaid funeral contracts that are not funded by insurance policies (such as inflation growth adjustments) are not paid under the plan because guaranty associations are prevented by their laws from paying non-insurance obligations,” officials say.

The Texas department and the special deputy receiver are asking policyholders to keep making their premium payments, to ensure that they continue to have access to guaranty association protection.

Representatives for NPS were not available to comment.