New Jersey Life Producer Law Practice Test

What is the maximum death benefit amount for which the Guaranty Association is liable in the event of insurer insolvency?

1. $50,000 per person

2. $100,000 per person

3. $150,000 per person

4. $200,000 per person

The correct answer is: $100,000 per person

The Guaranty Association plays a crucial role in protecting policyholders in the event that an insurance company becomes insolvent. In New Jersey, the maximum death benefit amount for which the Guaranty Association is liable is indeed set at $100,000 per person. This means that if a life insurance policyholder has a death benefit that exceeds this amount, the Guaranty Association will cover up to $100,000 of that benefit in the case of the insurer's failure. Understanding this limit is important for policyholders when considering their coverage amounts, as it directly influences the level of risk they assume if their insurer encounters financial difficulties. It’s also a key aspect of state regulation to ensure consumer protection in the insurance market.