A member insurer becomes insolvent. It had issued three life insurance policies to the same individual; together the policies provide contractual death benefits well above the statutory maximum, and the policies have accumulated cash values. What is the maximum the North Carolina Life and Health Insurance Guaranty Association must provide for all of this person's benefits under these policies?

Why B is correct

Under G.S. 58-62-21(d)(2) and (6), the Association's obligation for any one life is the lesser of the contractual obligations or $300,000 for all benefits, including cash values, regardless of how many policies were issued. Cash values are folded into the single aggregate limit — North Carolina has no separate $100,000 cash-value sublimit and no per-policy stacking — and $500,000 is the health benefit plan cap, not the life cap.

Why the other options are wrong

• A: Adding death benefits and cash values in separate categories exceeds the statutory aggregate; G.S. 58-62-21(d)(2),(6) caps all benefits, cash values included, at $300,000 per life.
• C: North Carolina has no separate $100,000 cash-value sublimit — cash values count within the single $300,000 aggregate under G.S. 58-62-21(d)(2),(6).
• D: The $300,000 limit is per life, not per policy; issuing three policies does not multiply or raise the cap (G.S. 58-62-21(d)(6)), and $500,000 is the health benefit plan limit.

Memory hook

One life, one $300,000 pot — cash values inside it.

Why C is correct

Under G.S. 58-62-21(d)(2),(6), the Association's aggregate obligation for any one life is the lesser of the contractual obligations or $300,000 for all benefits, including cash values, no matter how many policies the person held with the insolvent insurer. North Carolina folds cash values into the single $300,000 aggregate cap; there is no separate cash-value sublimit and no percentage-based payment formula.

Why the other options are wrong

• A) North Carolina has no separate lower cash-value sublimit; cash values count inside the $300,000 aggregate limit.
• B) $500,000 is the cap for health benefit plans under G.S. 58-62-21(d)(2a), not the aggregate life cap.
• D) North Carolina uses fixed dollar caps, not a proportional or percentage recovery rule.

Memory hook

One life, one cap: three hundred thousand, cash values included.

Why A is correct

Under G.S. 58-62-21(d)(2) and (d)(6), the Association's aggregate limit for any one life is the lesser of the contractual obligations or $300,000 for all benefits, including cash values, regardless of the number of policies held. North Carolina folds cash values into the single $300,000 aggregate — there is no separate cash-value sublimit and no proportional recovery rule.

Why the other options are wrong

• B) North Carolina has no separate $100,000 cash-value sublimit; cash values count inside the $300,000 aggregate.
• C) North Carolina uses dollar caps, not an 80% proportion of the contractual obligations.
• D) $500,000 is the limit for health benefit plans under G.S. 58-62-21(d)(2a), not the life aggregate.

Memory hook

One life, one cap: $300k with cash values folded in.

Why A is correct

Under G.S. 58-62-21(d)(2) and (6), benefits for any one life — including cash values, and regardless of the number of policies — are protected up to the lesser of the contractual obligations or $300,000 in the aggregate. North Carolina folds cash values into the single $300,000 cap; it has no separate cash-value sublimit and no percentage-based payout.

Why the other options are wrong

• B) North Carolina has no separate $100,000 cash-value sublimit; cash values are counted inside the $300,000 aggregate cap.
• C) $500,000 is the guaranty limit for health benefit plans under G.S. 58-62-21(d)(2a), not the aggregate life limit.
• D) $1,000,000 is the structured settlement limit under G.S. 58-62-21(d)(5), not the aggregate life limit.

Memory hook

One life, one $300k bucket — cash values ride inside it.