Question

What is the primary purpose of the Insurance Guaranty Fund Association?

A) To regulate insurance premiums
B) To invest policyholder premiums
C) To protect policyowners against insolvent insurance companies
D) To audit insurance claims

Answer 1

The Insurance Guaranty Fund Association serves to safeguard policyholders when their insurance company becomes insolvent, ensuring they still receive their entitled benefits.

Step-by-step explanation:

The primary purpose of the Insurance Guaranty Fund Association is to protect policyowners against insolvent insurance companies (Option C). This organization acts as a safety net for policyholders in the event that their insurance company fails financially and is unable to pay out claims. The fund ensures that individuals still receive the benefits they are entitled to, despite the company's inability to fulfill its obligations. This protection is crucial for maintaining consumer confidence in the insurance industry and helps to stabilize the market by preventing financial losses for policyowners.