State Guaranty Fund

AAA

DEFINITION of 'State Guaranty Fund'

A fund administered by a U.S. state to protect policy holders in the event that an insurance company defaults on benefit payments or becomes insolvent. The fund only protects beneficiaries of insurance companies that are licensed to sell insurance products in that state.

INVESTOPEDIA EXPLAINS 'State Guaranty Fund'

These state funds act as a form of insurance for insurance, and are funded by insurance companies that sell insurance in a given state.

The amount of funding an insurance company is required to pay is a percentage, ranging from 1- 2% of the net amount of insurance it sells within any particular state.

RELATED TERMS
  1. National Organization Of Life And ...

    NOLHGA is a voluntary organization of U.S. life- and health-insurance ...
  2. Admitted Insurance

    Insurance purchased from a company that is admitted (or licensed) ...
  3. Insurance

    A contract (policy) in which an individual or entity receives ...
  4. Insurance Score

    A rating computed and used by insurance companies that represents ...
  5. Default Risk

    The event in which companies or individuals will be unable to ...
  6. Premium

    1. The total cost of an option. 2. The difference between the ...
Related Articles
  1. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  2. Home & Auto

    Is Your Insurance Company Going Belly Up?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  3. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  4. Home & Auto

    Should I pull my money out of an annuity if the insurance company is having financial problems?

    If an insurance company is having financial problems, you don't necessarily have to pull your money out of the annuity. Even in a financial meltdown, there's no need to sweat when it comes to ...
  5. Home & Auto

    I know there is a form of deposit insurance where a portion of my bank account deposits is protected. ...

    First things first, it's only partially correct to think that a portion of your bank deposits is protected. The Federal Deposit Insurance Corporation (FDIC) will insure deposits up to $250,0 ...
  6. Options & Futures

    Let Life Insurance Riders Drive Your Coverage

    Find out how these additional benefits can help you customize your policy.
  7. Insurance

    How to Use a Waiver of Subrogation

    A waiver of subrogation means that a party to a contract waives the right to allow someone (usually an insurance company) to sue the other party to the contract in case of a loss.
  8. Retirement

    What is an equity-indexed annuity?

    Understand what an equity-indexed annuity is, its advantages and disadvantages, and how it differs from other annuity investments.
  9. Insurance

    What are some examples of unexpected exclusions in a home insurance policy?

    Learn about commonly excluded perils with different standard insurance policies. Explore events that homeowners should consider when purchasing insurance.
  10. Insurance

    What are the tax implications of a life insurance policy loan?

    Learn the instances in which you are required to pay taxes on a life insurance policy loan, so you can avoid making a costly mistake.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center