Notice of Protection Provided by The Alaska Life and Health Insurance Guaranty Association

Notice of Protection Provided by the Alaska Life and Health Insurance Guaranty Association 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. 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; or • 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; or • 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 income, health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values; • $300,000 for disability income insurance and long-term care insurance; • $500,000 for health benefit plans; • $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal value; • with respect to a structured settlement annuity, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values; • $250,000 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. 401, 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; or • $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 $250,000 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 Division of Insurance, 550 West Seventh Avenue, Suite 1560, Anchorage, Alaska, 99501-3567; 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 guaranty association should not be contacted regarding the financial information of an insurance company. The association is not an agency of the State of Alaska nor are there any guarantees by the State of Alaska regarding the payment of claims by the association. The guaranty association is not your insurance company. Alaska Life and Health Insurance Guaranty Association P.O. Box 220207 Anchorage, Alaska 99522-0207 (907) 243-2311 Division of Insurance 550 West Seventh Avenue, Suite 1560 Anchorage, Alaska 99501-3567 (907) 269-7900