There are two layers of protection included in an annuity policy’s cash value. The first layer is based on the life insurance company’s financial strength, and the second layer is provided by a guaranty association located in the state where the policy was issued. The main national organization for guaranties says that policyholders may rest assured that the guaranty associations found in various states exist to help protect and maintain coverage of policyholders. Guaranty associations provide safety nets to make sure the promises of the insurance industry are kept even if companies fail financially. In 1983, NOLHGA was started for the purpose of providing financial backing for policies in the event that insurers suffered a financial collapse.
Although guaranty associations exist today, many people have never heard of them and will not learn about them without searching for information. This is because state insurance commissioners do not want people to be aware of them. There is actually an act in existence that prohibits agents and insurance companies from blatantly advertising guaranty associations. Section 19 of this rule says that no person who is an insurance agent or is affiliated with an insurance company can publish, circulate or disseminate information to the public. This applies to magazines, newspapers and other forms of publication. Notices, circulars and other common forms of advertisements are also prohibited. They may not broadcast the information on the radio or on the television. Statements made about the guaranty associations cannot be verbal or written, so telling people about them is also prohibited for agents.
While there have been obvious attempts to suppress this information, state guaranty associations have continued offering policyholders financial protection for any annuities ranging between $100,000 and $500,000 for the past 25 years. The amount of coverage depends on the type of annuity chosen and the policyholder’s state of residence. The NOLHGA has a site that makes plenty of information available. People who are concerned about this issue can visit the site for more information. Some people have annuities, but they may not fully understand how these financial products work. It is important to learn this, and a good way to start is to discuss the details with an agent. An agent can explain how these function and what policyholders can expect. While they are not supposed to share information about guaranty associations, ACBI can provide helpful tips and offer answers to other various questions.