New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

The Office of General Counsel issued the following opinion on June 10, 2003, representing the position of the New York State Insurance Department.

Re: Coverage by the Life Insurance Company Guaranty Corporation of New York

Question Presented

If multiple insurance policies are issued on the life of one insured by the same insurer, to what extent does New York Insurance Law, Article 77 (McKinney 2002) protect such insured?

Conclusion

If the insured and the insurer meet all the requirements of Article 77, then pursuant to New York Insurance Law § 7708(a) (McKinney 2002), one insured would be limited to an aggregate liability of $500,000, no matter how many covered policies were issued on the life of that same insured from the same insurer.

Facts

No facts were provided. This was a general inquiry.

Analysis

N.Y. Ins. Law § 7702 (McKinney 2002) states in the relevant part that "[t]he purpose of this article is to provide funds to protect resident . . . beneficiaries, annuitants, payees and assignees of life insurance policies, . . . issued by life insurance companies, subject to certain limitations, against failure in the performance of contractual obligations due to the impairment or insolvency of the insurer issuing such . . . contracts." N.Y. Ins. Law § 7703 (McKinney 2002) states in the relevant part that "[t]his article shall apply to direct life insurance policies, health insurance policies, . . . 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 . . . ." N.Y. Ins. Law § 7705(k) (McKinney 2002) states in the relevant part that "’[r]esident’ means any person to whom contractual obligations are owed and who either (1) resides in this state at the time a member insurer is determined to be an impaired or insolvent insurer, or (2) resided in this state at the time a member insurer issued a covered policy to such person." N.Y. Ins. Law § 7705(d) (McKinney 2002) states in the relevant part that a "’[c]overed policy’ means . . . any certificate issued to an individual under any group policy or contract shall be considered to be a separate covered policy for purposes of section seven thousand seven hundred eight of this article." N.Y. Ins. Law § 7705(b) (McKinney 2002) states in the relevant part that "’[c]ontractual obligations’ means any obligation under covered policies, . . . ".

New York Insurance Law § 7708(a) (McKinney 2002) states in the relevant part:

If a domestic insurer is an impaired or insolvent insurer, the corporation shall with the approval of the superintendent:

. . . .

(3) provide such moneys, pledges, notes, guarantees or other means as are reasonably necessary to discharge such duties.

The aggregate liability of the corporation under this subsection shall not exceed five hundred thousand dollars for all benefits, including cash values, with respect to any one life or, to the extent benefits are not allocated pursuant to a covered policy to any one life, to any one covered policy; provided, however, (i) that the foregoing limitation shall not apply to any group or blanket accident or health insurance or accident and health insurance policy and (ii) that the corporation shall be liable under this subsection in an amount not to exceed one million dollars for all benefits, including cash values, with respect to any group annuity contract (or portion of any such contract) that does not guarantee annuity benefits with respect to any specific individual identified in the contract and with respect to any funding agreement issued to fund benefits under any employee benefit plan."

. . . .

If the insured and the insurer meet all the requirements of Article 77, then pursuant to New York Insurance Law § 7708(a) (McKinney 2002), one insured would be limited to an aggregate liability of $500,000, no matter how many covered policies were issued on the life of that same insured from the same insurer.

However, please note that the Life Insurance Company Guaranty Corporation is a separate entity from the Department and is not bound by the opinions of the Department.

For further information one may contact Senior Attorney Susan Dess at the New York City Office.