STATE INSURANCE GUARANTY LAWS AND PROVISIONS

How Can You Educate Yourself if Your Agent Can’t Talk About Them?

State Insurance Guaranty Laws & Provisions

The Question That Your Insurance Agent Cannot Legally Answer

The Sensible Premise Behind the Regulation is Good Public Policy

As licensed insurance agents or brokers, all structured settlement consultants and settlement planners receive questions from plaintiffs or their attorneys on the above subject. While the initial response may seem awkward, please understand that this is just a sensitivity to the state insurance laws which may not permit advertising (or even discussion) of such protection in connection with sale or placement of insurance products, including structured settlement annuities. While it’s somewhat unfair because bankers can discuss FDIC Insurance, the sensible premise behind the laws is good public policy. Insurance regulators do not want licensed agents, brokers or insurance salespeople selling insurance products from inferior companies and encouraging customers to throw caution into the wind.

The express purpose of this web page is to help consumers shorten their own independent research by deflecting such questions to the relevant State Insurance Department. Simply call the State Insurance Department in your state and ask them questions that licensed insurance agents tell you they not permitted to answer, or simply do not have the answer. Links to the home pages of all of the 50 state insurance departments in the United States can be found by scrolling down below. Click here for an excellent paper “NOLHGA, the Life and Health Insurance Guaranty System, and the Financial Crisis of 2008–2009”, by Peter Gallanis, then President of NOLHGA. The Insurance Retirement Institute also provides an excellent question and answer piece about how regulatory efforts ensure maximum protection for structured settlement annuitants, or other annuity policyholders.

Secondary Market “Annuities” Warning

Such investments involve the assignment of payment rights. They are not annuities. They are receivables. When they involve the assignment of structured settlement payment rights, they are properly defined as structured settlement receivables. A purchase of such investments involves a Receivables Purchase Agreement not an insurance application and the investor does not pay a premium to an insurance company.

Such investments may not be recognized as annuities under state insurance law, or by the National Association of Insurance Commissioners (see Statutory Issue paper No. 160, finalized April 6, 2019), and you may not be covered in the event of carrier insolvency. In states that have adopted the Life & Health Guaranty Association Model Act (#520), contained in the 2017 revisions, Sections 3(A)(5)(c) and 3(B)(2)(n), guaranty associations do NOT provide coverage for (A) persons who acquire the rights to payments from a structured settlement annuity through a factoring transaction (as defined in 26 U.S.C. 5891(c)(3)(A)) and (B) benefits to which a payee (or beneficiary) has transferred his rights in a factoring transaction (as defined in 26 U.S.C. 5891(c)(3)(A)). It’s crucial to be aware that exclusion provision in the Model Act is retroactive, so you’re exposed even if you acquired the rights to someone else’s structured settlement payments prior to your state’s adoption of the Model Act. Please see the video below for more detail and commentary.

Insurance on Insurers: How State Insurance Guaranty Funds Protect Policyholders – Federal Reserve Bank of Chicago (chicagofed.org)

State Insurance Department. A listing of state insurance departments across the U.S.

Last updated March 31, 2026

https://youtu.be/4w43V1xGHrE?si=ZdU6WuQIcvMlUaCL