Shh! Don't talk about Fight Club!


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Did you ever watch the movie "Fight Club"?  If so, the persistent line throughout the movie is "Don't talk about Fight Club!"  Why?  Well, watch the movie.

As many of you know, the intersection of law and insurance simply fascinates me.  Here's an instance of that:  

All U.S. states have a State Guaranty Association.  These associations insure life and health insurance companies in case of failure. 

Failure is rare, but it happens from time to time.  As both an insurance agent and an attorney, I have seen the results of this.  In that situation, the Guaranty Association worked out very, very well. 

Consumers need to know that this program exists.  Who better to tell them than their insurance agent?

For banks, consumers know that the Federal Deposit Insurance Corporation (FDIC) exists.  For their brokers, they know that the Securities Investor Protection Corporation (SIPC) exists.  How?  It's plastered all over the front door and their sales materials.  However, when it comes to state insurance Guaranty Associations, most states have prohibitions on agents and insurance carriers discussing them.  


It appears that the reasoning is that the lawmakers do not want the carriers and agents selling products or companies that might need to use the guaranty association.  That may be understandable, but the FDIC and SIPC don't seem to have the same fears.  

How many failed banks had FDIC on the front door?  

How many failed brokers had SIPC on their materials?

So, if you want to know more about the state protections of your insurance policy, you might have to find it on your own, unless the laws throughout the country change. Until then, when considering life insurance, long-term care insurance, annuities, and the like, know that these funds exist.  Chances are that your agent can point you in the right direction to the fund.  Just don't be surprised when s/he doesn't "talk about the Guaranty Association."

Want to know more about your state's guaranty association?  Here's a good place to start


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