Final answer:
The Guaranty association is the entity that protects policyowners, insureds, and beneficiaries when an insurer is financially impaired and unable to fulfill its obligations under insurance contracts.
Step-by-step explanation:
The entity that protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment is the Guaranty association. The FDIC (Federal Deposit Insurance Corporation) protects depositors in the event of a bank failure, ensuring up to $250,000 per depositor per bank. The SEC (Securities and Exchange Commission) oversees Wall Street and regulates securities transactions to protect investors. The NAIC (National Association of Insurance Commissioners) assists state insurance regulators in setting standards and coordinating regulatory oversight, but it does not provide financial protection against insurer defaults. the correct answer to the student's question is C) Guaranty association.