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Question: My client wants to expand the protection offered by the Florida State Life and Health Guaranty Association. Is it possible for her to do so by titling her life and annuity policies with a joint owner?
Answer: No. The state guarantee fund rules are not 100% consistent, but in general they protect individuals up to the fund limits, rather than protecting each jointly owned policy.
Here’s the language of the Florida statute:
(9) The association’s liability for the contractual obligations of the insolvent insurer shall be as great as, but no greater than, the contractual obligations of the insurer in the absence of such insolvency, unless such obligations are reduced as permitted by subsection (4), but the aggregate liability of the association shall not exceed $100,000 in cash values, or $300,000 for all benefits including cash values, with respect to any one life. In no event shall the association be liable for any penalties or interest. (Emphasis added.)
By the way, state guaranty funds (SFGs) have been likened to the kind of bank deposit protections offered by the Federal Deposit Insurance Company (FDIC). The FDIC provides a similar kind of individual insurance and financial institution oversight as SGFs.
While banks are permitted to use the FDIC logo and insurance information in their advertising, financial professionals may not tell their prospective clients about SGFs—at least as any kind of solicitation to purchase insurance. While each state has its own version of law prohibited using SGF information with clients, each of them—including Florida–does have such a law.
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