R590. Insurance, Administration.        (Effective 8-20-01)
R590-155. Disclosure of Life and Health Guaranty Association Limitations.
R590-155-1. Authority.
     This rule is promulgated pursuant to Subsection 31A-2-201(3)(a), in which the commissioner is empowered to administer and enforce this title and to make rules to implement the provisions of this title and pursuant to the specific authority of Subsection 31A-28-119(4), to provide guidelines to enable insurers to comply with the requirement to disclose to insureds the extent that contractual guarantees are not covered or have limited coverage by the Utah Life and Health Guaranty Association.

R590-155-2. Purpose and Scope.
     A. The purpose of this rule is to specify the form and content of the summary document for insurers to disclose to insureds the extent that contractual guarantees are not covered or have limited coverage by the Utah Life and Health Guaranty Association as required by Section 31A-28-119.
     B. The rule shall apply to all insurance transactions in this state involving direct life and health insurance policies and annuity contracts as specified in Subsection 31A-28-103(2).

R590-155-3. Rule.
     A. An insurer authorized to do business in this state, which is subject to the Utah Life and Health Insurance Guaranty Association Act, shall disclose to its policy or contract holders that its contractual guarantees may not be covered by the Utah Life and Health Insurance Guaranty Association.
     B. For the purpose of this rule, the statutory term "policy or contract holders" shall also mean
insureds or certificate holders of group policies.
     C. Disclosure shall be made in writing using the Utah Insurance Department summary document entitled "Utah Life and Health Insurance Guaranty Association, Notice to Policyholders," as follows:

TABLE

NOTICE TO POLICYHOLDERS

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     Insurance companies licensed to sell life insurance, health insurance, or annuities in the State of Utah are required by law to be members of an organization called the Utah Life and Health Insurance Guaranty Association ("ULHIGA"). If an insurance company that is licensed to sell insurance in Utah becomes insolvent (bankrupt), and is unable to pay claims to its policyholders, the law requires ULHIGA to pay some of the insurance company's claims. The purpose of this notice is to briefly describe some of the benefits and limitations provided to Utah insureds by ULHIGA.

PEOPLE ENTITLED TO COVERAGE
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     You must be a Utah resident
     You must have insurance coverage under an individual or group policy.

POLICIES COVERED
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     ULHIGA provides coverage for certain life, health and annuity insurance policies.

EXCLUSIONS AND LIMITATIONS
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     Several kinds of insurance policies are specifically excluded from coverage. There are also a number of limitations to coverage. The following are not covered by ULHIGA:
     Coverage through an HMO
     Coverage by insurance companies not licensed in Utah.
     Self-funded and self-insured coverage provided by an employer that is only administered by an insurance company.
     Policies protected by another state's guaranty association.
     Policies where the insurance company does not guarantee the benefits.
     Policies where the policyholder bears the risk under the policy.
     Re-insurance contracts.
     Annuity policies that are not issued to and owned by an individual, unless the annuity policy is issued to a pension benefit plan that is covered.
     Policies issued to pension benefit plans protected by the Federal Pension Benefit Guaranty Corporation.
     Policies issued to entities that are not members of ULHIGA, including health plans, fraternal benefit societies, state pooling plans and mutual assessment companies.

LIMITS ON AMOUNT OF COVERAGE
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     Caps are placed on the amount ULHIGA will pay. These caps apply even if you are insured by more than one policy issued by the insolvent company. The maximum ULHIGA will pay is the amount of your coverage or$500,000 -- whichever is lower. Other caps also apply:
     $200,000 in net cash surrender values.
     $500,000 in life insurance death benefits (including cash surrender values).
     $500,000 in health insurance benefits.
     $200,000 in annuity benefits -- if the annuity is issued to and owned by an individual or the annuity is issued to a pension plan covering government employees.
     $5,000,000 in annuity benefits to the contract holder of annuities issued to pension plans covered by the law. (Other limitations apply).
     Interest rates on some policies may be adjusted downward.

DISCLAIMER
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to, but not to include, the
two addresses at the end.)

    PLEASE READ CAREFULLY:

     COVERAGE FROM ULHIGA MAY BE UNAVAILABLE UNDER THIS POLICY. OR, IF AVAILABLE, IT MAY BE SUBJECT TO SUBSTANTIAL LIMITATIONS OR EXCLUSIONS. THE DESCRIPTION OF COVERAGES CONTAINED IN THIS DOCUMENT IS AN OVERVIEW. IT IS NOT A COMPLETE DESCRIPTION. YOU CANNOT RELY ON THIS DOCUMENT AS A DESCRIPTION OF COVERAGE. FOR A COMPLETE DESCRIPTION OF COVERAGE, CONSULT THE UTAH CODE, TITLE 31A, CHAPTER 28.
     COVERAGE IS CONDITIONED ON CONTINUED RESIDENCY IN THE STATE OF UTAH.
     THE PROTECTION THAT MAY BE PROVIDED BY ULHIGA IS NOT A SUBSTITUTE FOR CONSUMERS' CARE IN SELECTING AN INSURANCE COMPANY THAT IS WELL-MANAGED AND FINANCIALLY STABLE.
     INSURANCE COMPANIES AND INSURANCE AGENTS ARE REQUIRED BY LAW TO GIVE YOU THIS NOTICE. THE LAW DOES, HOWEVER, PROHIBIT THEM FROM USING THE EXISTENCE OF ULHIGA AS AN INDUCEMENT TO SELL YOU INSURANCE.
     THE ADDRESS OF ULHIGA, AND THE INSURANCE DEPARTMENT ARE PROVIDED BELOW.

     Utah Life and Health Insurance Guaranty Association, 955 E. Pioneer Rd., Draper, Utah 84020
     Utah Insurance Department, State Office Building, Room 3110, Salt Lake City, Utah 84114

     D. Disclosure shall be given by the time of delivery of the policy, contract, or certificate. The summary shall also be available upon request by a policy or contract holder.
     E. As provided under Subsection 31A-21-201(3), each insurer shall file a copy of the form.

R590-155-4. Severability.
     If any provision or clause of this rule or the application of it to any person is for any reason held to be invalid, the remainder of the rule and the application of any provisions to other persons or circumstances shall not be affected.

R590-155-5. Compliance Date.
     This rule is in effect on the date stated in the Notice of Effective Date form relating to this rule that the department files with the Division of Administrative Rules (the "effective date". The effective date will follow a period of 45 days during which interested parties will have time to prepare to be in compliance with this rule. It will also be the date on which the department will begin enforcing this rule. The Notice of Effective Date form is published in the Utah State Bulletin, a publication of the Division of Administrative Rules. The Utah State Bulletin is found at the website, www.rules.state.ut.us. In addition, the effective date may be found at the department's website, www.insurance.state.ut.us, by clicking on "Industry Resources" and then "Rules" and scrolling down to the appropriate reference to the rule.

KEY: insurance
2001                                                                                                                       31A-2-201
Notice of Continuation March 27, 1998                                                             31A-28-119
                                                                                                                             

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