GENERAL PURPOSES AND LIMITATIONS OF THE EUPHORIA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION

E.S.A. 40-3001, et seq.

DISCLAIMER

THE EUPHORIA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION MAY NOT PROVIDE COVERAGE FOR ALL OR A PORTION OF THIS POLICY. IF COVERAGE IS PROVIDED, IT MAY BE SUBJECT TO SUBSTANTIAL LIMITATIONS AND EXCLUSIONS, AND IS DEPENDENT UPON CONTINUED RESIDENCE IN EUPHORIA. THEREFORE, YOU SHOULD NOT RELY UPON COVERAGE BY THE EUPHORIA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION IN SELECTING AN INSURANCE COMPANY OR IN SELECTING AN INSURANCE POLICY. INSURANCE COMPANIES AND THEIR AGENTS ARE PROHIBITED BY LAW FROM USING THE EXISTENCE OF THE EUPHORIA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION IN SELLING YOU ANY FORM OF AN INSURANCE POLICY, OR TO INDUCE YOU TO PURCHASE ANY FORM OF AN INSURANCE POLICY. EITHER THE EUPHORIA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE EUPHORIA INSURANCE DEPARTMENT WILL RESPOND TO ANY QUESTIONS YOU MAY HAVE REGARDING THIS DOCUMENT.

THE EUPHORIA LIFE AND HEALTH

INSURANCE GUARANTY ASSOCIATION

1234 SW Main Street

Capital City, EU 67584

THE EUPHORIA INSURANCE DEPARTMENT

987 E Johnson Drive

Capital City, EU 67583

This is a summary of the basic provisions of the Euphoria Life and Health Insurance Guaranty Association Act. It is only a summary, and does not provide an in-depth analysis of that act. Nothing in this summary modifies the rights of persons who are protected by the act, or the rights and duties of the association.

The purpose of the Euphoria Life and Health Insurance Guaranty Association Act is to protect certain individuals who purchase life insurance, annuities or health insurance in the state of Euphoria. The act provides for the establishment of a funding mechanism to pay benefits or provide insurance coverage to individuals when a life or health insurance company is unable to meet its obligations by reason of insolvency or financial impairment.

However, not all individuals with a right to recover under life or health insurance policies are protected by the act. An individual is only provided protection when:

1. the individual, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, is the beneficiary, assignee or payee of a covered policy or contract holder;
   
2. the individual policy or contract holder is a resident of the state of Euphoria;
   
3. the individual is not a resident of the state of Euphoria, but only with respect to an annuity which has been awarded pursuant to a judgment or settlement agreement in a medical malpractice liability action;
   
4. the individual is not a resident of the state of Euphoria, but only under all of the following conditions:
   
   1. the impaired or insolvent insurer was a Euphoria domestic insurer; and
      
   2. the insurer never had a license to do business in the state in which the individual resides; and
      
   3. the state in which the individual resides has an association similar to this state’s; and
      
   4. the individual is not eligible for coverage by the association of the state in which the individual resides.

Additionally, the association may not provide coverage for the entire amount the individual expects to receive from the policy. The association does not provide coverage for any portion of the policy where the individual has assumed the risk, for any policy of reinsurance, for interest rates that exceed a specified average rate, for employers’ plans that are self-funded, for parts of plans that provide dividends or credits in connection with the administration of the policy, for policies sold by companies not authorized to do business in Euphoria, or for any unallocated annuity contract. Also, the association will not provide coverage where any guaranty protection is provided to the individual under the laws of the insolvent or impaired insurer’s state of domicile.

The act also limits the amount the association is obligated to pay individuals on various policies. The association does not pay more than the amount of the contractual obligation of the insurance company. Regardless of the number of policies or contracts, the association is not obligated to pay amounts over $300,000 in life insurance death benefits; $100,000 in 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 any net cash surrender and net cash withdrawal values, unless the annuity contract is awarded pursuant to a judgment or settlement in a medical malpractice liability action; or more than $300,000 in the aggregate for the above coverages with respect to any one life.