New Jersey Life Producer Practice Exam

Who funds the New Jersey Life and Health Guaranty Association?

1. Private insurers

2. Member insurers

3. The state government

4. The Federal Reserve

The correct answer is: Member insurers

The New Jersey Life and Health Guaranty Association is funded by member insurers. This association serves as a safety net for policyholders in the event that a member insurance company becomes insolvent. The funding structure is designed so that all licensed life and health insurers in New Jersey contribute to the association, allowing it to provide the necessary financial backing to settle claims and cover the policies of affected policyholders. By pooling resources from all member insurers, the association ensures that there are sufficient funds available to protect consumers and maintain confidence in the insurance system. This collective funding approach emphasizes the responsibility of insurers to safeguard the financial interests of their policyholders, as well as to share the risk associated with potential insolvencies. The other options, such as state government or federal entities, do not provide the operational funding required for this specific association, as it operates primarily within the insurance industry and relies on contributions from its member insurers.