Life insurance policies and annuities are critical components of modern day financial, retirement and estate planning.  However, all life insurance products and annuities are not created equal and it is important to evaluate these products carefully.  In addition, the financial safety net offered to policyholders and annuitants under state law varies widely.  If the company you purchase your life insurance or annuity from goes belly up, it is important to know what protections you may – or may not – have.

State guaranty association relief varies from state to state and benefits are not provided in a uniform fashion. Guaranty association coverage limits are usually determined by the policyholder or annuitant’s state of residence. In 2014 several states raised their coverage limits, and in 2015 New Hampshire raised its coverage limit to $250,000.  In most states there is an overall cap of $300,000 in total benefits for any one individual with multiple policies with the insolvent insurer. Four states – Connecticut, New Jersey, New York and Washington – offer a lifetime maximum coverage amount of $500,000. Puerto Rico provides only a lifetime maximum of $100,000.

The extent to which the proceeds of annuity contracts are protected from creditors’ claims also varies widely from state to state.  An individual may unwittingly compromise their protections by relocating from one state to another.

Edward Stone Law can assist you in evaluating the risks associated with life settlements, structured settlement annuities, SPIA’s, group annuities and other life insurance related matters.

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