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FAQs: About Life Insurance Policyholder Protection and the LICGC

Q: Will I have to wait for payments once my insurer is taken over by the Superintendent?

A: When your insurer is initially taken over by the Superintendent, payments to you may be suspended for a period of time. This may be necessary to allow the Superintendent time to sort out the affairs of the insurer. In some cases, you may have to wait many months before receiving payments; in other cases, benefits may not be delayed at all.

Q: I bought my life insurance policy when I lived in New York but now I live in Florida. Am I protected?

A: As long as you were a resident of New York state at the time of purchase and your insurer was licensed in New York, you are protected. You may also have additional protection in your current state of residence.

Q: My insurance company's home office is in another state, but the company is licensed in New York. Am I protected by the LICGC?

A: You are protected if you were a resident of New York State when you purchased the policy or are a resident at the time your insurance company becomes insolvent. Policies purchased from domestic life insurers prior to August 2, 1985 may have additional protection through the separate LIGC regardless of residency.

Q: I have a separate account variable annuity contract, i.e., my funds are invested separately from those of the company and I bear all the risk of gains and losses. What kind of protection do I have?

A: The LICGC provides no protection under the contract described above. You bear the entire risk under the contract. However, there are some separate accounts in which individuals do not bear the full amount of the risk; some protection would be available for these kinds of contracts. Assets in such separate accounts would normally retain their separate status in the event of the insolvency of the insurer and could not be used to pay the insurer's other debts and obligations that do not arise out of the business of the separate account.

Q: My separate account annuity guarantees a minimum return. Am I protected by the LICGC?

A: You are protected only for the portion of the contract that is guaranteed. Most of this guaranteed amount could be payable from the assets of the separate account. The LICGC would come into play only in the event of a shortfall as to the guaranteed amount.

Q: I have a 401(k) plan with my employer. I have selected a fixed interest option funded by a Guaranteed Investment Contract (GIC) issued by a life insurance company to my employer. Will my invested funds be protected?

A: If the GIC guarantees annuity benefits with respect to a specific individual identified in the contract, that individual is protected by the LICGC up to a maximum of $500,000. However, if the GIC does not guarantee annuity benefits with respect to any specific individual identified in the contract, the contract is protected up to a maximum of $1 million in the aggregate for all claims made under that contract.

Q: My husband and I each have an annuity contract worth $300,000. Does the $500,000 cap apply to us jointly?

A: No, the LICGC puts the aggregate limit of $500,000 on any one life, so the limit would apply to you and your husband separately.

Q: Does the LICGC have enough money to pay policyholder benefits?

A: The LICGC obtains money to continue coverage and pay eligible claims by making assessments of the LICGC’s other member insurance companies.  Under current law, the LICGC’s total amount of outstanding assessments is limited to $558 million.  The LICGC expects that a pending insolvency will consume the corporation’s remaining assessment capacity.  Accordingly, efforts are currently underway to examine alternatives that would result in the LICGC being able to meet its payment obligations with respect to any insolvencies that may arise in the future.  The life insurance industry in New York is committed to working with relevant parties in the state government to develop a solution that meets this objective.

About DFS

One of the Department’s most important responsibilities is regulating the activities of life insurers doing business in the State to ensure that the promises made in insurance policies are fulfilled. To that end, each life insurer licensed in New York submits comprehensive annual and quarterly reports on its financial condition to the Department. In addition, the Department's insurance examiners conduct regular on-site examinations of all domestic life insurers (those insurers incorporated in New York) to evaluate their financial condition, and their underwriting and claims-handling practices. Out-of-state life insurers doing business in New York are subject to on-site examinations by their home state insurance departments.

To determine if an insurer is licensed in New York, use our Insurance Company Search function. If you still need help, or have a question about a New York-licensed life insurance company, please contact the DFS.

Learn more about about policyholder protection on our Policyholder Protection and the LICGC page, or print a copy of the DFS Life Insurance Policyholder Protection and the LICGC (PDF) brochure.