§431:16-203 - Coverage and limitations.
§431:16-203 Coverage and limitations. (a) This part shall provide coverage, for the policies and contracts specified in subsection (b) to:
(1) Persons who, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, are the beneficiaries, assignees, or payees of the persons covered under paragraph (2); and
(2) Persons who are owners of or certificate holders under such policies or contracts and who:
(A) Are residents; or
(B) Are not residents, but only under all of the following conditions:
(i) The insurers which issued such policies or contracts are domiciled in this State;
(ii) Such insurers never held a license or certificate of authority in the states in which such persons reside;
(iii) Such states have associations similar to the association created by this part; and
(iv) Such persons are not eligible for coverage by such associations.
(b)(1) This part shall provide coverage to the persons specified in subsection (a) for direct, nongroup life, accident and health or sickness, annuity, supplemental policies or contracts, and for certificates under direct group policies and contracts, except as limited by this part;
(2) This part shall not provide coverage for:
(A) Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract holder;
(B) Any policy or contract of reinsurance, unless assumption certificates have been issued;
(C) Any portion of a policy or contract to the extent that the rate of interest on which it is based:
(i) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds a rate of interest determined by subtracting two percentage points from Moody's Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four years before the association became obligated; and
(ii) On or after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody's Corporate Bond Yield Average as most recently available;
(D) Any plan or program of an employer, association, or similar entity to provide life, accident and health or sickness, or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association, or similar entity under:
(i) A Multiple Employer Welfare Arrangement as defined in section 514 of the Employee Retirement Income Security Act of 1974, as amended;
(ii) A minimum premium group insurance plan;
(iii) A stop-loss group insurance plan; or
(iv) An administrative services only contract;
(E) Any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract;
(F) Any policy or contract issued in this State by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in this State; and
(G) Any annuity contract or group annuity certificate which is not issued to or owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under such contract or certificate.
(c) The benefits for which the association may become liable shall in no event exceed the lesser of:
(1) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer, or
(2) With respect to any one life, regardless of the number of policies or contracts:
(A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance;
(B) $100,000 in accident and health or sickness insurance benefits, including any net cash surrender and net cash withdrawal values;
(C) $100,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values;
provided that in no event shall the association be liable to expend more than $300,000 in the aggregate with respect to any one life under subparagraphs (A), (B), and (C). [L 1987, c 347, pt of §2; am L 2002, c 155, §92; am L 2003, c 212, §113]