Please enable JavaScript to view the comments powered by Disqus.

Ask Kim

Why You’re Still Protected if Your Long-Term-Care Insurer Goes Bust

Each state has special procedures in place to rescue insolvent insurers.


What happens to my benefits if my long-term-care insurance company goes under? --K.W., New York City

See Also: Quiz: Are You Covered?

Each state has a guaranty association and special procedures to help protect policyholders from insolvent insurers. If an insurer starts to have financial troubles, the insurance regulator in the company’s home state would step in and “oversee the operations of the company and try to implement a plan to restore the company to sound financial footing,” says Sean McKenna, spokesman for the National Organization of Life and Health Guaranty Associations. The insurance department may also work with the state’s guaranty association to find another company to take over its business.

If that doesn’t work, the insurance department can seek an order of liquidation from the receivership court. If the company is liquidated, then the guaranty association coverage would kick in. All states provide at least $300,000 in coverage for long-term-care insurance, and some states have higher limits (see for links to each state’s guaranty association). You’ll receive benefits from the guaranty association as you would from the insurer, up to your state’s limits.


For more information about how insurance regulators strike a balance between consumer protection and insurers’ financial stability when deciding whether to approve long-term-care insurers’ rate increases, see Options for Dealing With Rising Long-Term-Care Insurance Premiums. For more information about guaranty association coverage for annuities, see What Happens When the Insurer of Your Annuity Goes Broke?

See Also: 10 Things You Should Know About Long-Term Care

Got a question? Ask Kim at