Identification

• A state guarantee fund acts similar to the FDIC. It insures that the policyholders won't lose all their funds if an insurance company becomes insolvent.
  
  

History

• New York was the first state to recognize the need for protection for its policyholders. It started the first state guarantee fund in 1941. Since then, all other states also created a fund.
  
  

Coordination

• Since insurance companies operate in several different states, there was a need to coordinate the state guarantee funds. NOLHGA, the National Organization of Life and Health Guarantee Associations, does just that. They began in 1983 and coordinate the efforts of all the states, Puerto Rico, and Washington DC.
  
  

Coverage

• While every state offers different guarantees, all of them offer a minimum of $100,000 of insurance for a single annuity with a maximum of $300,000 per individual. Some states insure up to $500,000 per contract.
  
  

Function

• While the state government and federal government don't back the funds, all the insurance companies that function in the state guarantee the money. Each company pays an assessment according to the amount of business they do in the state.
  
  

Considerations

• The FDIC doesn't receive money from the government, but it operates from assessments to banks. It functions very much like the state guarantee funds.