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Insurance is regulated by each state independently. That means that each state tends to do things a little differently. Some states have something called a state guarantee association, which is there to make good on claims on Mortgage Protection Policies issued by now defunct companies. In order to do this, the state guarantee association must assess a fee to other insurance companies.
It's important to remember that due diligence must still be conducted when choosing a company to issue your Mortgage Protection Policies, even if you live in a state with a guarantee association. You see, guarantee associations have very stringent rules about qualifying situations. So while they're a great backup, you only want to rely on them when you have no other choice. It's also important to point out that they do not guarantee that no claim will be denied—they simply fulfill certain obligations of certain defunct insurers.
If you live in a state with a guarantee association, you'll be given a form to read and sign before your insurance policy can be issued. Be sure to familiarize yourself with the terms of your state's guarantee association.