The New Jersey and Life and Health Insurance Guaranty Association is?

The New Jersey Life and Health Insurance Guaranty Association operates as a safety net for policyholders in the event that an insurance company becomes insolvent. It is funded by assessments collected from member insurance companies that are licensed to do business in New Jersey. This means that the financial support for the association comes from the insurance industry rather than from external sources like federal grants or public donations. These assessments are not considered taxes; instead, they are fees intended to ensure that there are sufficient funds to pay policyholders what they are owed if their insurance provider fails.

The structure and purpose of the association are designed to protect consumers and maintain confidence in the insurance market. This is especially critical in the insurance sector where sudden company failures can leave individuals and families without necessary coverage. Thus, the emphasis on assessments from member companies ensures that the risk of insolvency is shared throughout the industry.