The California Department of Insurance has updated the notice insurers in the state must provide when they deliver life, health and annuity contracts.
The new guaranty fund notice bulletin, Bulletin Number 2011-3, replaces a bulletin the department issued in 1996, and the revised requirements will take effect Sept. 26.
The new bulletin says the new summary document and disclaimer, which describes the coverage provided by the California Life and Health Insurance Guarantee Association (CLHIGA), must be provided both when an insurer delivers a policy and upon request by a policy owner.
The guaranty fund notice requirements are governed by California Insurance Code Section 1067.17(b)(2). The requirements apply to member insurers of CLHIGA and to non-member insurers authorized to do business in California, the bulletin says.
In the notice of protection, an insurer is supposed to tell policyholders that CLHIGA will guarantee 80% of life insurance death benefits and 80% of cash surrender or withdrawal values, both of which are not to exceed $300,000.
CLHIGA will guarantee 80% of the present value of annuity benefits, including net cash value withdrawal and net cash surrender values, but not to exceed $250,000.
The maximum amount of protection provided by CLHIGA for an individual for all life insurance, annuities and structured settlement annuities is $300,000, regardless of the number of policies or contracts covering the individual, the notice states.
As of April 1, the maximum guarantee for health insurance is $470,125. The “amount will increase or decrease based on changes in the health care cost component of the consumer price index to the date on which an insurer becomes an insolvent insurer,” the notice says.
- Warren S. Hersch