What is the purpose of the life and health insurance guaranty association?

The life and health insurance guaranty association plays a vital role in protecting the interests of policyholders. Its primary purpose is to provide a safety net for individuals who hold life and health insurance policies in the unfortunate event that their insurance company becomes insolvent. This arrangement ensures that policyholders can access certain benefits or coverage, thereby maintaining their financial security and peace of mind even if their insurer cannot fulfill its obligations.

This protective function is crucial because it helps to prevent significant financial loss for consumers who may rely heavily on their insurance for health care, life coverage, or other critical needs. In the absence of such associations, policyholders could find themselves without coverage and facing substantial out-of-pocket expenses or loss of death benefits.

Other options reflect different functions or purposes unrelated to this protective measure. They encompass roles such as promoting companies, regulating premiums, or assisting agents, none of which align directly with the guaranty association's fundamental role of safeguarding policyholders’ interests in times of insurer insolvency.