Both consumers and producers are calling insurance guaranty funds to learn more about how the funds work, an official says.
Peter Gallanis, president of the National Organization of Life & Health Insurance Guaranty Associations, Herndon, Va., notes that insurers entering rehabilitation pay policyholders first, and that state investment and risk-based capital laws have required insurers to invest more conservatively than other financial institutions have been investing.
If guaranty associations must step in, then they will protect holders of annuities as well as holders of life insurance policies, Galanis says.
Annuities are subject to coverage limits, with most states offering $100,000 in protection for the present value of the annuity and some states providing up to $500,000 in protection, according to Gallanis.
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A guaranty association would cover the insurance component of a variable annuity, but not the subaccounts, Galanis says.