The Office of General Counsel issued the following informal opinion on July 9, 2002, representing the position of the New York State Insurance Department.
Re: Life Insurance Company Guaranty Corporation of New York Long Term Care Policy
Would a N. Y. resident insured under an individual Long Term Care policy purchased in N. Y. from a domestic life insurer with a lifetime monthly benefit of $9,000 be able to receive up to $500,000, payable over 55½ months at $9,000 per month, from the Life Insurance Company Guaranty Corporation of New York (the "LICGC") in the event the life insurer became insolvent?
N.Y. Ins. Law Article 77 (McKinney 2000) provides that such a health insurance policy should be guaranteed up to $500,000 in benefits by the LICGC provided that the insured remains qualified within the terms and conditions of the policy. However, the Department is not aware of a court case interpreting N. Y. Ins. Law Article 77 (McKinney 2000) with respect to a long-term payout based on the facts in question.
None other than as indicated in the question.
The LICGC was established as a not-for-profit membership corporation by Chapter 802 of the Laws of 1985 and is governed by N.Y. Ins. Law Article 77 (McKinney 2000), known as "The Life Insurance Company Guaranty Corporation of New York Act." The Act applies to covered policies that were issued on or after August 2, 1985. The scope of Article 77 is set forth in N.Y. Ins. Law § 7703(a) and it provides as follows:
(a) This article shall apply to direct life insurance policies, health insurance policies, annuity contracts, funding agreements and contracts supplemental to life and health insurance policies, annuity contracts or funding agreements issued to a resident by a life insurance company licensed to transact life or health insurance or annuities in this state at the time the policy, contract or agreement was issued or at the time it became an impaired or insolvent insurer, as the case may be.
All life insurance companies licensed to transact life or health insurance or an annuity business in the State of New York are members of the LICGC. N.Y. Ins. Law § 7705(h) (McKinney 2000). The LICGC is funded by assessments made against its members after a member insurer is declared insolvent by a court of law. N.Y. Ins. Law § 7709 (McKinney 2000).
Accordingly, the Long Term Care policy in question should be guaranteed by the LICGC up to $500,000 in benefits, provided, of course, that the insured continues to remain qualified within the terms and conditions of the policy for the extended period in question. N.Y. Ins. Law § 7708(a) (McKinney 2000). Please see the provisions of N. Y. Ins. Law Article 77 (McKinney 2000) for other important sections of law governing the activities of the LICGC.
For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.