When an insurance company's financial distress forces it out of business in the U.S., the company does not file for bankruptcy. A state court usually issues the insurance company an order of insolvency and liquidation, according to the National Organization of Life & Health Insurance Guaranty Associations' (NOLHGA) website. The association is comprised of life and health insurance guaranty associations in all 50 states and the District of Columbia, which protect policyholders when an insurance company fa ...