Requires the Rhode Island life and health insurance guarantee association to be obligated to cover a minimum of five hundred thousand dollars ($500.000) in present value of annuity benefits, including net cash surrender and net cash withdrawal values.

Rhode Island Life Insurance Guarantee Protection Bill

This bill would increase the minimum amount of protection that Rhode Island's life and health insurance safety net — called the Life and Health Insurance Guaranty Association — must provide to people who hold annuity contracts. Specifically, it would set a minimum coverage floor of $500,000 in the present value of annuity benefits, which includes the money a person could receive if they surrendered or withdrew funds from their annuity policy.

An annuity is a financial product, often used for retirement income, where a person pays into an insurance company and receives regular payments in return. The Guaranty Association exists to protect consumers if an insurance company goes out of business or becomes unable to pay its obligations. Think of it like the FDIC for bank accounts, but for certain insurance products — it acts as a backstop so policyholders don't lose everything if their insurer fails.

This bill primarily affects Rhode Islanders who own annuity contracts through life insurance companies. By establishing a minimum coverage obligation of $500,000, the bill ensures that the Guaranty Association must cover at least that amount per person, providing stronger financial protection for annuity holders in the event their insurance company becomes insolvent. This could be especially important for retirees or near-retirees who rely on annuities as a significant source of income.

The bill has been introduced and referred to the Senate Commerce Committee, where it will be reviewed before any further legislative action is taken.