New Jersey Life Producer Law Practice Test

What is the maximum amount of death benefits for which the Guaranty Association is liable if they assume management of an insolvent insurer?

1. $50,000 per person

2. $75,000 per person

3. $100,000 per person

4. $200,000 per person

The correct answer is: $100,000 per person

The Guaranty Association provides a safety net for policyholders when an insurance company becomes insolvent, essentially stepping in to secure benefits for the insured individuals. In New Jersey, the maximum amount of death benefits that the Guaranty Association is liable for is indeed set at $100,000 per person. This limit is designed to protect consumers and ensure that they receive some compensation despite the failure of their insurance provider. This amount reflects a balance between providing enough coverage to be meaningful while also managing financial exposure for the Guaranty Association. It is essential for individuals to be aware of this limit, as it can impact their decisions regarding coverage needs and risk management for life insurance policies. Thus, when the Guaranty Association intervenes on behalf of a policyholder, they are assured of receiving up to $100,000 for death benefits, offering a critical form of financial protection during times of uncertainty.