UNIT 36 KENTUCKY LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION 1-4 / CREDIT LIFE AND HEALTH INSURANCE 5-6 / FRATERNAL BENEFIT SOCIETIES 7
Limitations on Association Obligations
- The benefits the Association is obligated to cover are limited to the lesser of the contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer or the following for any one life, regardless of the number of polices or contracts: + $300,000 in life insurance death benefits, but no more than $100,000 net cash surrender and net cash withdrawal values for life insurance; + $100,000 in health insurance benefits, including any net cash surrender and net cash withdrawal values; + $100,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values, except for each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased. [Sec. 304.42-030.3 and 030.4] - In no event is the Association obligated to cover more than: + A total of $300,000 in benefits with respect to any one life.
Scope of Coverage
- There are many specific exclusions from coverage. Some of the exclusions include the following: + Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract owner. - Also excluded is any obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner or policyowner, such as: + Claims based on marketing materials; + Misrepresentations regarding policy benefits. [Sec. 304.42-030.1 and 030.2]
Membership
If benefits are provided on the lives of children, the age requirement for adult membership may not be less than age 15, nor may it be greater than age 21. [Sec. 304.29-061]
Policy Types and Benefits
The initial amount of credit life insurance must not exceed the total amount repayable under the contract of indebtedness. [Sec. 304.19-030 to 050; Reg. 806.19-010]
Purpose of Subtitle
The purpose of this article is to protect policyowners, insureds, beneficiaries, annuitants, payees, and assignees of certain life insurance policies, health insurance policies, and annuity contracts, subject to certain limitations, against failure in the performance of contractual obligations due to the impairment or insolvency of the insurer issuing such policies or contracts. To provide this protection: - An association of insurers is created - Members of the association are subject to assessment to provide funds to carry out the purpose of this subtitle. [Sec. 304.42-020]
Creation of Association
There is created a nonprofit legal entity to be known as the Kentucky Life and Health Insurance Guaranty Association. All member insurers will be and remain members of the Association as a condition of their authority to transact insurance in this state. The Association will exercise its powers through a board of directors. For purposes of administration and assessment, the Association will maintain three accounts: - The health insurance account; - The life insurance account; and - The annuity account. [Sec. 304.42-060]
Joint Lives
When a husband and wife are insured under this provision, the premium rate charged must not exceed 150% of the rate permissible for a single life. [Reg. 806.19-060]
