Types

• There are often two types of guaranty associations in a state. One takes care of the insolvency of property and casualty companies, and the other handles the same situation with life and health insurance companies.
  
  

Function

• The purpose of the fund is to pay for claims or reimburse customers with annuities and cash value. Every state has a limit to the amount of coverage you'll receive.
  
  

Size

• The amount of insurance available in most states is $100,000 for an annuity but can run as high as $500,000. Death benefits coverage is $300,000 for most states but can also be as high as $500,000. Each state has its own amount of insurance, depending on the type of coverage.
  
  

Identification

• Normally, the insurance company in financial trouble sends you a letter to notify you that your insurance company is in receivership. Sometimes the guaranty fund or the receiver will notify you.
  
  

Potential

• Many times the state insurance regulators or even the receiver find insurance companies to take over the business the bankrupt company has on its books. In this case, your policy continues with the new company.