Summary Document and Disclaimer Concerning Coverage, Limitations, and Exclusions Under the Alaska Life and Health Insurance Guaranty Association Act

Alaska Tony Knowles, Governor Department of Community and Economic Development # Division of Insurance 3601 C Street, Suite 1324, Anchorage, AK 99503-5948 Telephone: (907) 269-7900 • Fax: (907) 269-7910 • Text Telephone: (907) 465-5437 Email: Insurance@dced.state.ak.us • Website: www.dced.state.ak.us/insurance/ # BULLETIN B 01-04 TO: All Insurers Authorized to Transact Life or Health Insurance Business in the State of Alaska and Other Interested Parties RE: Summary Document and Disclaimer Concerning Coverage, Limitations, and Exclusions Under the Alaska Life and Health Insurance Guaranty Association Act AS 21.79.160(b) and (c) require the Alaska Life and Health Insurance Guaranty Association to prepare a summary document and disclaimer for approval by the Director of the Division of Insurance that describes coverage, limitations, and exclusions under the Alaska Life and Health Insurance Guaranty Association Act. The Director has approved the attached summary and disclaimer for this purpose. Effective March 31, 2001, an insurer may not deliver a policy or contract to a policy or contract owner unless the attached summary document and disclaimer is delivered to the policy or contract owner at the time of delivery of the policy or contract. This document must also be made available upon the request of a policy owner. If you have any questions relating to the summary document and disclaimer, please contact Maxine L. Froemling, Financial Examiner, at maxine_froemling@dced.state.ak.us or (907) 269-7907. Dated: January 31, 2001 Robert A. Lohr Robert A. Lohr Director "Promoting a healthy economy and strong communities" # Summary Concerning Coverage, Limitations, and Exclusions under the Alaska Life and Health Insurance Guaranty Association Act A resident of Alaska who purchases life insurance, annuities, or accident and health insurance should know that an insurance company licensed in this state to write these types of insurance is a member of the Alaska Life and Health Insurance Guaranty Association. The purpose of this association is to assure that a policyholder will be protected within statutory limits if a member insurer becomes financially unable to meet its obligations. If this should happen, the guaranty association will assess its other member insurance companies for the money to pay the claims of insured persons who live in this state, and in some cases, to keep coverage in force. However, the valuable extra protection provided by these insurers through the guaranty association is not unlimited. This protection is not a substitute for your care in selecting a company that is well managed and financially stable. ## Important Disclaimer The Alaska Life and Health Insurance Guaranty Association may not provide coverage for this policy. If coverage is provided, it may be subject to substantial limitations or exclusions, and require continued residency in Alaska. You should not rely on coverage by the Alaska Life and Health Insurance Guaranty Association in selecting an insurance company or in selecting an insurance policy. Coverage is NOT provided for your policy or any portion of it that is not guaranteed by the insurer or for which you have assumed the risk. Your insurance company or its agent is required by law to give or send you this notice. However, your insurance company and its agents are prohibited bylaw from using the existence of the guaranty association to induce you to purchase any kind of insurance policy. The state law that provides for this safety net coverage is called the Alaska Life and Health Insurance Guaranty Association Act. The full text of the act can be found in AS 21.79.010 – 21.79.990. Provided below is a brief summary of this law's coverages, exclusions, and limits. This summary does not cover all provisions of the law, nor does it in any way change your rights or obligations under the act or the rights or obligations of the guaranty association. ## COVERAGE Generally, an individual will be protected by the life and health insurance guaranty association if the individual lives in Alaska and holds a life or health insurance contract or annuity contract, or if the insured is insured under a group insurance contract issued by a member insurer. The beneficiary, payee, or assignee of an insured person is protected as well, even if a non-resident of Alaska. # EXCLUSIONS FROM COVERAGE The association does not protect a person holding a policy if - the individual is eligible for protection under the laws of another state (this may occur when the insolvent insurer was incorporated in another state whose guaranty association protects insureds who live outside that state); - the insurer was not authorized to do business in this state; - the policy is issued by an organization that is not a member of the Alaska Life and Health Insurance Guaranty Association. The association does not provide coverage for - a policy or portion of a policy which is not guaranteed by the insurer or for which the individual has assumed the risk, such as a variable contract sold by prospectus; a policy of reinsurance (unless an assumption certificate was issued); - an interest rate yield that exceeds an average rate; - a dividend; - a credit given in connection with the administration of a policy by a group contract holder; - an employer's plan to the extent that it is self-funded (that is, not insured by an insurance company, even if an insurance company administers the plan); - an unallocated annuity contract issued to an employee benefit plan protected under the United States Pension Benefit Guaranty Corporation; - that part of an unallocated annuity contract not issued to a specific employee, union, association of natural persons benefit plan, or a government lottery; - any portion of a policy or contract to the extent that the required assessments are preempted by federal or state law; - an obligation that does not arise under the express written terms of the policy or contract issued by the insurer; - certain obligations to provide a book value accounting guaranty for defined contribution benefit plan participants; - that part of a policy or contract that provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract. # LIMITS ON AMOUNT OF COVERAGE The act also limits the amount the association is obligated to pay. The association cannot pay more than what the insurance company would owe under a policy or contract. Also, for any one insured life, no matter how many policies or contracts were issued by the same company, even if such contracts provided different types of coverages, the association will pay a maximum of - $300,000 in net life insurance death benefits and no more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; - for health insurance benefits, $100,000 for coverages not defined as disability, basic hospital, medical, and surgical, or major medical insurance, including any net cash surrender and net cash withdrawal values; 2 - $300,000 for disability insurance; - $500,000 for basic hospital, medical, and surgical or major medical insurance; - $100,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal value; - with respect to a structured settlement annuity, $100,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values; - $100,000, in the aggregate, of present-value annuity benefits, including net cash surrender and net cash withdrawal values with respect to an individual participating in a governmental retirement plan established under 26 U.S.C. 400, 26 U.S.C. 403(b), or 26 U.S.C. 457 and covered by an unallocated annuity contract, or to a beneficiary of the individual if the individual is deceased; - $5,000,000 in unallocated annuity contract benefits, irrespective of the number of contracts held by that contract holder, with respect to any one contract holder or plan sponsor whose plan owns, directly or in trust, one or more unallocated annuity contracts. Note to benefit plan trustees or other holders of unallocated annuities (GICs, DA Cs, etc.) covered by the act: for unallocated annuities that fund governmental retirement plans under sections 401 (k), 403(b), or 457 of the Internal Revenue Code, the limit is $100,000 in present value of annuity benefits including net cash surrender and net cash withdrawal per participating individual. In no event shall the association be liable to spend more than $300,000 in the aggregate per individual. For covered unallocated annuities that fund other plans, a special limit of $5,000,000 applies to each contract holder, regardless of the number of contracts held with the same company or number of persons covered. In all cases the contract limits also apply. ## COMPLAINTS AND COMPANY FINANCIAL INFORMATION A written complaint to allege violation of any provision of the Alaska Life and Health Insurance Guaranty Association Act must be filed with the Alaska Division of Insurance, 3601 C Street, Suite 1324, Anchorage, Alaska, 99503-5948; telephone (907) 269-7900. Financial information for an insurance company, if the insurance information is not proprietary, is available at the same address and telephone number. The guarantee association should not be contacted regarding the financial information of an insurance company. This information is provided by: Alaska Life and Health Insurance Guaranty Association P.O. Box 103415 Anchorage, Alaska 99510-3415 (907) 243-2311 Alaska Division of Insurance 3601 C Street, Suite 1324 Anchorage, Alaska, 99503-5948 (907) 269-7900 3