AD Banker Comprehensive Practice Exam

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Enhance your exam readiness with the AD Banker Comprehensive Exam guide. Includes flashcards and multiple-choice questions with explanations.

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What is the maximum liability of the Life and Disability Insurance Guaranty Association for cash values?

$200,000
There is no limit
$100,000
$300,000

The correct answer is: $100,000

The maximum liability of the Life and Disability Insurance Guaranty Association for cash values is indeed $100,000. This limit is established to protect policyholders in the event a life insurance company becomes insolvent. By capping the amount that can be recovered for cash value, the association aims to ensure that all policyholders receive some level of compensation while maintaining a sustainable fund for payouts across multiple claims that might arise from different insolvencies. It's important to note that the $100,000 limit specifically applies to the cash surrender values of life insurance policies, distinguishing it from other types of benefits or coverage the association may provide. This protective measure helps stabilize the insurance market and fosters consumer confidence by providing a safety net for policyholders facing the risk of insurer insolvency.