Final answer:
The Penn Life and Health Guaranty Association provides financial protection for life insurance death benefits up to a certain limit, similar to how the FDIC and Pension Benefit Guaranty Corporation protect deposits and pensions. Although the exact coverage limit may vary by state, these associations commonly protect up to $300,000 in life insurance death benefits.
Step-by-step explanation:
The Penn Life and Health Guaranty Association is a safety net for policyholders of insurance companies that go bankrupt or become insolvent. This association protects various insurance benefits, including life insurance death benefit claims. The specific coverage limits can vary from one state to another, but for the purpose of this example, we'll explore the concept using general information about such associations.
Typically, life insurance death benefits are protected up to a certain limit. While the exact limit wasn't specified in the question, these guaranty associations often have a cap similar to the FDIC's deposit insurance limit or the Pension Benefit Guaranty Corporation's coverage limit. For instance, most state guaranty associations will cover up to $300,000 in life insurance death benefits, though this value can differ by state and policy type.
Likewise, life insurance policies with a cash value component, known as cash-value (whole) life insurance, typically have a separate level of protection for the accumulated cash value. In contrast to pension insurance and deposit insurance, which have federally mandated coverage limits (e.g., the FDIC's $250,000 coverage limit), the protection limits for life insurance and health insurance claims are established at the state level by associations like the Penn Life and Health Guaranty Association.