Iowa Life & Health Insurance Guaranty Association - Frequently Asked Questions

What happens when my insurance company goes out of business?

In most cases, a guaranty association will continue coverage as long as premiums are paid or cash value exists. It may do this directly, or it may transfer the policy to another insurance company. In any case, policyholders should continue making premium payments to keep their coverage in force.

How is policy coverage determined?

Coverage is determined by Iowa law and policy language at the time the Iowa Guaranty Association is activated to provide protection (when the member insurer is found to be insolvent and ordered liquidated by a court). In light of changes in the law and the dramatic variations in policy language, the Guaranty Association cannot make statements regarding coverage of a specific policy unless it is a policy with a company for which the Guaranty Association has been activated to provide protection.

What is the Iowa Life & Health Insurance Guaranty Association?

The Iowa Life & Health Insurance Guaranty Association was created by the Iowa legislature in 1987 to protect state residents who are policyholders and beneficiaries of policies issued by an insolvent insurance company, up to specified limits. All insurance companies (with limited exceptions) licensed to write life and health insurance or annuities in Iowa are required, as a condition of doing business in the state, to be members of the Guaranty Association. If a member company becomes insolvent and an order of liquidation is entered, money to continue coverage and pay claims is obtained through assessments of the Guaranty Association's other member insurance companies writing the same line or lines of insurance as the insolvent company. All 50 states, the District of Columbia, and Puerto Rico have life and health insurance guaranty associations.

Who is protected?

Life and health insurance guaranty associations cover individual policyholders and their beneficiaries; typically, persons protected by certificates of insurance issued under policies of group life or group health insurance are also covered. Limits on benefits and coverage are established by state law. For more information about coverage, see the questions below or contact the Guaranty Association or Iowa Division of Insurance.

If I move to another state after purchasing a policy, will I still have guaranty association coverage? If so, who will provide it?

If you purchased a policy from a company that is a member insurer of the state guaranty association where you reside, you will have coverage. Guaranty association protection is generally provided by the guaranty association in your state of residence at the date of the liquidation order regardless of where your policy was purchased. Policyholders who reside in states where the insolvent insurer was not licensed are covered, in most cases, by the guaranty association of the state where the failed company was domiciled.

What contracts are covered?

Generally, direct individual or direct group life and health insurance policies as well as individual annuity contracts issued by the Guaranty Association's member insurers are covered by the Guaranty Association. Such coverage is limited by the terms of the Iowa Life & Health Insurance Guaranty Association Act.

Are all policies fully protected?

Not always. If your insurance company fails, the maximum amount of protection provided by the Guaranty Association for each type of policy, no matter how many of that type of policy that you bought from your insurance company and subject to statutory limitations, is:

Life Insurance: $300,000 in death benefits per life, but not more than $100,000 in net cash surrender and net cash withdrawal values

Health Insurance: $500,000 in benefits which are for basic hospital expenses, medical-surgical expenses, or major medical expenses; or $100,000 for other health insurance benefits including any net cash surrender and net cash withdrawal values

Disability Income Protection Insurance: $300,000 per life

Long-Term Care Insurance: $300,000 per life

Annuity (owned individually outside of an employer retirement plan*): $250,000 in present value of annuity benefits, including net cash surrender and net cash withdrawal values

Individual annuity issued pursuant to an employer retirement plan*, or a guaranteed investment contract or a group annuity not issued pursuant to an employer retirement plan*: $250,000 of present value of annuity benefits including net cash surrender and net cash withdrawal values

Guaranteed investment contract or group annuity issued pursuant to an employer retirement plan*: $5 million

* 401(K) plans, defined benefit plans, profit sharing plans, cash balance plans and other qualified retirement plans sponsored by employers (including sole proprietors). This term also includes 403(b) tax sheltered annuities sponsored by charitable entities and education institutions and 457 arrangements sponsored by tax-exempt entities and governmental entities.

If I own three annuities which each have a present value of annuity benefits, including net cash surrender and net cash withdrawal value, of $100,000 and my insurance company fails, how much is protected?

The total protection per owner per member company is $250,000 for all of the present value of annuity benefits, including net cash surrender and net cash withdrawal values. As a result, if an individual owned three $100,000 annuities with the same insolvent insurance company, the individual would have total Guaranty Association coverage of only $250,000. The value in excess of this statutory coverage limit would be eligible for submission as a policyholder claim in the receivership, and the annuity holder may receive distributions as the company's assets are liquidated by the receiver.

Is long-term care insurance covered by the Guaranty Association?

Yes. Long-term care insurance is typically considered health insurance for Guaranty Association purposes. The limit on the amount of coverage the Guaranty Association will provide for long-term care insurance is $300,000 per life.

What will happen to my insurance coverage if the Guaranty Association becomes liable for my policy?

Protection can be provided in one of several different ways. For example, a financially sound insurer may take over the insolvent company's policies and assume the responsibility for continuing coverage and paying covered claims. The Guaranty Association may provide coverage directly by continuing the insolvent insurer's policies or issuing replacement policies with other insurance companies. In some situations, the Guaranty Association may work with other state guaranty associations to develop an overall plan to provide protection for the failed insurer's policyholders. The amount of protection provided and when you receive it may depend on the particular arrangement worked out for handling the failed insurer's obligations.

For group health insurance, state law requires the Guaranty Association to continue your coverage only for a limited time based on the renewal date of your policy. Group contracts can be terminated as of sixty days after the finding of insolvency. If the Guaranty Association finds that benefits provided or the provisions pertaining to renewal or premiums charged under any contract are not reasonable, it may offer alternate coverage as approved by the court. If the owner does not accept alternate coverage within 180 days of notification, the Guaranty Association has no liability for any claim incurred or continuing beyond the termination date.

When might the Guaranty Association provide benefits?

If your insurer is no longer able to fulfill its obligations, ongoing benefit payments to you may be reduced or suspended by the courts in order to sort out the affairs of the financially troubled insurer. As a result, you may have to wait many months before the Guaranty Association is permitted or able to provide benefit payments. Hardship provisions may be instituted by the receiver to continue benefit payments.

What is NOT protected by the Guaranty Association?

Policies with insurers not licensed to do business in Iowa; policy benefits the insurer does not guarantee, which were not approved by the Iowa Division of Insurance, or for which the policyholder bears the risk (such as the non-guaranteed portion of a variable life insurance or annuity contract); self-insured employer plans; interest rate yields that exceed an average rate; Medicare Part C and D policies; and fraternal benefit society insurance certificates. Certain, less commonly known insurance policies and arrangements not listed here are also not protected. If you are unsure about whether your policy is excluded from Guaranty Association protection, you should review the current Iowa Guaranty Association Act.

How will I know if my life or health insurance company has failed or is unable to fulfill its obligations to its policyholders?

You will receive a notification from the receiver and/or the Guaranty Association if your insurance company is found to be insolvent and ordered liquidated.

How can I find out if my company is licensed in Iowa?

Call the Iowa Insurance Division at 515.654.6600. The Division maintains complete and current records of all insurance companies licensed to do business in the state. You may also obtain a listing of Iowa licensed companies at the Division’s website at

Why hasn't my agent or company told me more about the Iowa Life & Health Insurance Guaranty Association?

The law prohibits insurance agents and companies from including information about the existence of the Guaranty Association in any advertising. The Guaranty Association is not and should not be a substitute for your prudent selection of an insurance company that is well-managed and financially stable. Agents are prohibited by statute from using this website or the existence of the Iowa Guaranty Association as an inducement to purchase insurance. For more information, see that portion of the Iowa Guaranty Association Act found at Iowa Code §508C.18.

Is there a comparable organization that covers property and casualty insurance contracts?

Yes. Property and casualty insurance--such as automobile, homeowners, professional liability, medical malpractice, workers' compensation, etc.--may be protected by the Insurance Guaranty Association. That Guaranty Association can be reached at:

Iowa Insurance Guaranty Association
801 Grand Avenue, Suite 3700
Des Moines, IA 50309-8004
Phone: 515.243.4191

Where can I get advice on purchasing life, health, or annuity products?

The Guaranty Association does not provide financial advice or comment on the financial condition of any particular company. You can obtain advice and information from captive insurance agents, independent insurance brokers, and rating agencies. Generally, captive agents sell products from a single insurer. Brokers usually can sell the products of multiple insurers.

Rating agencies assign comparative ratings to insurers based on various criteria. Most rating agencies are paid by the insurer to do an assessment examination and to issue a rating. This is the case with the largest and most well-known agencies, such as Standard and Poor’s, A. M. Best, Moody's, and Fitch ratings. Since the companies pay to have themselves rated, those ratings are generally available to the public without charge.

You may also wish to contact the Iowa Insurance Division regarding information on a particular company.

Are you a State agency?

No. The Guaranty Association is a private entity, with its membership made up of all the life and health insurers licensed in Iowa (in fact, under state law an insurer must be a member of the association to be licensed to do business). The Guaranty Association was created by the legislature to ensure continued insurance coverage and serve as a safety net for Iowa residents should their life or health insurer fail. The Guaranty Association does work in cooperation with the Iowa Insurance Division in fulfilling its role of protecting residents whose insurance company is being liquidated.

How can I determine the financial soundness of my insurance company?

Consumers may contact the Insurance Division (515.654.6600) to determine if an insurance company is licensed to write business in Iowa. Consumers can also check the financial strength ratings of the company, which are issued by various ratings agencies (see “Where can I get advice on purchasing life, health, or annuity products?” above).

If my company is in the process of rehabilitation/conservation and I have an emergency and need to withdraw monies from my annuity, what is the process?

Surrenders and loans may be allowed on a case-by-case basis for genuine hardship situations upon written application to the Receiver. Hardship circumstances and procedures will differ from company to company and (after liquidation) from guaranty association to guaranty association. Examples of hardship cases may include (1) terminal illness or permanent disability; (2) substantial medical expenses not covered by medical insurance; (3) financial difficulties resulting in inability to pay for essential life support needs like food and shelter; (4) imminent removal from a hospital, nursing home, or other medical care facility due to inability to pay; (5) imminent bankruptcy; and (6) immediate need for college tuition payments for a dependent child.

Are variable life insurance policies and variable annuity contracts covered by the Guaranty Association?

The terms and coverage of variable insurance products are very diverse and, as a result, it is difficult to make general statements about Guaranty Association coverage of variable insurance products without reviewing a specific policy or contract. The Guaranty Association Act provides that it shall not apply to any portion of any policy or contract not guaranteed by the insurer or under which the risk is borne by the policy or contract holder. In addition, the Guaranty Association Act does not apply to the portion of a policy or contract that provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract that has not been credited to the policy or contract as of the date Guaranty Association coverage begins. Therefore, as a general rule, the Guaranty Association Act covers the portion of a variable life insurance policy or variable annuity contract that is guaranteed by the specific contract, subject to Guaranty Association Act coverage limitations.

If my company is liquidated, do I have to file a claim with the Guaranty Association?

If your insurance company is liquidated, you will receive a notice from the court-appointed Receiver (typically the Insurance Commissioner of the company’s state of domicile), who will oversee the liquidation of the company and inform you of any new claims procedures. There may be no change in the claims submission process—guaranty associations, working with the Receiver, sometimes continue processing claims using the liquidated company’s existing claims staff if that will maximize the speed and efficiency with which claims are processed. In other cases, the guaranty associations may process the claims themselves or use an independent processing company, known as a third-party administrator, to process claims. In any event, you will be notified of the ongoing claims process. If you wish to continue coverage, you must continue to pay the premium required by your policy.

Should I continue to pay my premiums?

Yes. If you are paying premiums to your company and wish to keep your coverage in place, you must continue to do so—those premiums go to the guaranty association providing you continuing coverage. If you stop paying premiums, your insurance coverage may be terminated.

Is my company covered by the Guaranty Association?

The Guaranty Association provides coverage to owners of covered policies issued by member insurers (life, health, and annuity insurers licensed to write business in Iowa). To determine if a company is licensed to write business in Iowa, you may call the Iowa Insurance Division at 515.654.6600. The Division maintains complete and current records of all insurance companies licensed to do business in Iowa. Information about companies licensed to write insurance in Iowa may also be obtained from the Division's Web site.

What happens if the benefits promised in my policy are greater than the coverage limits provided by the Guaranty Association?

Guaranty associations, in conjunction with the Receiver, may be able to negotiate a transfer of a company’s policies, up to the amount of the guaranty association benefit limits, to a financially sound insurer. If a guaranty association administers claims against the policy and the benefit limits are reached, any claim in excess of that limit may be submitted as a policyholder-level claim against the estate of the failed insurance company, and the contract holder may receive distributions as the company’s assets are liquidated by the Receiver.

Is the Guaranty Association backed by the State of Iowa?

The Guaranty Association was created by Iowa state statute. Funding for the Guaranty Association is not, however, provided by the State of Iowa. All funding of the Guaranty Association is provided by member insurers, i.e., insurance companies licensed to do business in the State of Iowa.

What is the difference between Receiver of an insolvent insurance company and the Guaranty Association?

When a court determines that an insurance company can no longer fulfill its contractual obligations, it is placed under an Order of Liquidation. For an insurance company, liquidation is similar to bankruptcy. The court then appoints a Receiver to take over the insurer. As a general rule, this is the Commissioner of the Department of Insurance of the state in which the insolvent insurer is domiciled, which then acts through a Special Deputy Receiver. The Receiver takes possession of the assets of the insurer and administers them under the general supervision of the court. The Receiver also takes title to all of the property, contracts and records of the insurer.

The Guaranty Association has the responsibility of paying all covered resident policyholders and covered contract owners pursuant to the terms of the contracts and the limitations provided by the Guaranty Association Act. Upon payment of policyholder liabilities, the Guaranty Association becomes one of the claimants against the estate of the insolvent insurance company, and is reimbursed for the Guaranty Association’s statutory liabilities to the extent funds are available from the insolvent insurance company’s estate assets. To the extent that funds are not available from the estate of the insolvent insurance company, the Guaranty Association assesses all member insurance companies to collect the additional funds for covered policyholders and contract owners to be reimbursed for payment of the insolvent insurer’s statutory liabilities.

Who operates the Guaranty Association?

The Guaranty Association is governed by a Board of Directors. Any member insurance company of the Guaranty Association is eligible to be a director of the Guaranty Association. Members of the Board of Directors are selected by the member insurers and serve three-year terms. The Association is under the direct supervision of the Commissioner of the Iowa Insurance Division. The Board of Directors has retained G. Thomas Sullivan of the Nyemaster Goode, P.C. law firm as Administrator of the Guaranty Association to administer the daily operations of the Guaranty Association.

What is NOLHGA?

NOLHGA is the National Organization of Life and Health Insurance Guaranty Associations. The Guaranty Association is a member of NOLHGA, as are all other state life and health insurance guaranty associations. Because most insurance companies are licensed in more than one state, NOLHGA provides assistance to guaranty association members to coordinate their actions so as to effectively and efficiently fulfill their statutory obligations to policyholders. NOLHGA is a voluntary association. More information is available about NOLHGA on its website at

NOTE: This information is not intended as legal advice, and no liability is assumed in connection with its use. The applicable state guaranty association statute is the controlling authority, regardless of any information presented on this site. Users should seek advice from a qualified attorney and should not rely on this compilation when considering any questions relating to guaranty association coverage.