Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Florida Law and EthicsHard
A Florida 2-20 General Lines Agent is discussing the Florida Life and Health Insurance Guaranty Association (FLHIGA) with a client. The client is concerned about the financial stability of their life insurance company. The agent correctly explains that FLHIGA provides protection for policyholders up to certain limits when a life or health insurer becomes insolvent. Which of the following statements accurately describes a key aspect of FLHIGA's coverage limits?
- AFLHIGA only covers the cash surrender value of life insurance policies, not death benefits.
- BThe maximum coverage for death benefits is $300,000 per life, regardless of the number of policies.
- CThe maximum coverage for health insurance benefits is $1,000,000 per individual.
- DFLHIGA provides unlimited coverage for all life and health insurance benefits.
Show answer & explanationAnswer & explanation
Correct answer: B. The maximum coverage for death benefits is $300,000 per life, regardless of the number of policies.
FLHIGA provides specific coverage limits for different types of benefits. For life insurance death benefits, the maximum coverage is $300,000 per life. For cash surrender or withdrawal values, it's $100,000 per policyholder, regardless of the number of policies. Health insurance benefits have a $500,000 per individual limit. Option B is correct for death benefits.
Why the other options are wrong
- A. FLHIGA covers both death benefits and cash surrender values, up to their respective limits.
- C. The maximum for health insurance benefits is $500,000 per individual, not $1,000,000.
- D. Coverage is not unlimited; there are specific statutory limits.
Florida Life and Health Insurance Guaranty Association (FLHIGA) Limits
Statutory maximum amounts FLHIGA will pay for covered claims when a life or health insurer becomes insolvent.
- Death Benefits: $300,000 per life
- Cash Surrender/Withdrawal: $100,000 per policyholder
- Health Benefits: $500,000 per individual
Memory trick: Three Hundred for Death, One Hundred for Cash, Five Hundred for Health.