What is the Life and Health Insurance Protection Association?

The Life and Health Insurance Protection Association is a nonprofit organization made up of member companies from the life and health insurance industry that are licensed to sell annuities, life and/or health insurance products in Colorado.

Why was the Life and Health Insurance Protection Association formed?

The Colorado Legislature enacted a law (The Life and Health Insurance Protection Association Act) authorizing the formation of this organization to assist Colorado residents who hold annuities, life, or health insurance policies issued by insurance carriers who become insolvent.

What Colorado law gives authority to the Life and Health Insurance Protection Association?

House bill 91-1325, Article 20, Life and Health Insurance Protection Association Act, which became law on July 1, 1991.

Who does the Life and Health Insurance Protection Association help?

Except under certain very restrictive conditions, in order to be covered by the Life and Health Insurance Protection Association, a person must be a resident of Colorado. In addition, assistance is not available if the insurer was unable to meet its obligations or was declared insolvent by a court before July 1, 1991.

Where does the Association get its funds?

The Association charges annual fees to its members. It will also assess the members following a determination that certain insurers’ policies will be covered. These fees are then used to pay the claims of Colorado residents who hold policies issued by life and health insurance companies which become insolvent or can no longer meet their contractual obligations on or after July 1, 1991.

Does it matter where the policyholder purchased the policy?

No. However, the insurer must have been licensed to sell products in Colorado, and with certain exceptions, the claimant must be a resident of Colorado.

Are there financial limits to what the Life and Health Insurance Protection Association will pay?

Yes. The Association provides coverage up to $300,000 for life insurance benefits; $100,000 in net cash surrender or withdrawal for life insurance; $100,000 for coverages not defined as disability, basic hospital, medical and surgical, or major medical insurance or long term care insurance; $300,000 for disability insurance; $300,000 for long term care insurance; $500,000 for basic hospital, medical and surgical, or major me dical insurance; and $250,000 in present value of annuity benefits, including net cash surrender and net cash withdrawal values. The Association does not provide coverage for unallocated annuities.

With respect to each payee of a structured settlement annuity, $250,000 of present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values.

The Association cannot expend more than $300,000 in total, with respect to any one life, except that with respect to benefits for basic hospital, medical and surgical, or major medical insurance, the aggregate liability of the Association shall not exceed $500,000 with respect to any one individual.

Is the Colorado Association affiliated with a national organization?

Yes. The Colorado Association is a member of the National Organization of Life and Health Guaranty Associations (NOLHGA) whose objective is to facilitate greater coordination, cooperation, and collective action by state guaranty associations.

How often do the members of the Colorado Association meet?

The member companies meet annually. The Board of Directors of the Life and Health Insurance Protection Association meet on an as-needed basis and annually following the annual meeting of the member companies.

Who serves on the Board of Directors?

The member companies of the Association elect the nine-member Board.

How many member companies are in the Association?

Over 1,000 members.

Can the Life and Health Insurance Protection Association cancel a policy upon the request of a Colorado policyholder?

No. The Association cannot cancel a policy with any insurance company. Further, the Association does not have access to information regarding policyholder claims. The policyholder must contact the insurance company directly to cancel a policy, acquire information about claims, or receive general information about the insurance company.

Can the Life and Health Insurance Protection Association tell an individual about the financial security or policies for issue on a specific insurance company?

No. The Association deals only with insolvent or “troubled” companies and, therefore, does not provide financial information for solvent companies. Company ratings and other information may be obtained from various sources at the public library or from the Colorado Division of Insurance.

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.