Kansas Life & Health Insurance Guaranty Association

Contact Information

Kansas Life & Health Insurance Guaranty Association
3745 SW Wanamaker Road, Suite C
Topeka, KS 66610
(p) 785.271.1199 (f) 785.272.0242
Association Web site: http://www.kslifega.org
State Insurance Department: http://www.ksinsurance.org/

Law Summaries Report

[ Current as of January 01, 2020 ] ]

Coverages

Covered Contracts

§40-3003(b) This act shall provide coverage to the persons specified in subsection (a) for direct, nongroup life, health, or annuity policies or contracts, supplemental contracts or unallocated annuity contracts covering individuals participating in a governmental deferred compensation plan established under section 457 of the U.S. internal revenue code pursuant to K.S.A. 2010 Supp. 74-49b08 through 74-49b14, and amendments thereto, whether or not a resident, or the beneficiaries of each such individual if deceased, and for certificates under direct group policies and contracts issued by member insurers, except as limited by this act. (Amended effective 7/1/2011).

Non-Covered Contracts

§40-3008(n). (1) 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; (2) any policy or contract of reinsurance, unless assumption certificates have been issued; (3) any portion of a policy or contract to the extent that the rate of interest on which it is based , or the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (A) 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 (B) on and 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; (4) any plan or program of an employer, association or similar entity to provide life, health 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: (A) A multiple employer welfare arrangement as defined in section 3 (40) of the employee retirement income security act of 1974 (29 U.S.C. § 1002(40)); (B) a minimum premium group insurance plan; (C) a stop-loss group insurance plan; or (D) an administrative services only contract; (5) 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; (6) 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; (7) any unallocated annuity contract, except as provided in subsection (b) of K.S.A. 40–3003 , and amendments thereto; and (8) a policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to part C or part D of subchapter XVIII, chapter 7 of title 42 of the United States code (commonly known as medicare part C & D) or any regulations issued pursuant thereto ; or (9)(A) Any portion of a policy or contract: (i) To the extent it 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, but which have not been credited to the policy or contract; or (ii) as to which the policy or contract owner's rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this act; whichever is earlier. (B) If a policy's or contract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and which are not subject to forfeiture under this paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture. (Amended effective 7/1/2011).

Non-Resident Coverage

§40-3003(a)(2) Yes: (B) are not residents, but only with respect to an annuity contract awarded pursuant to K.S.A. 60-3407 or 60-3409, and amendments thereto, an annuity contract for future economic loss procured pursuant to a settlement agreement in a medical malpractice liability action, as defined by K.S.A. 60-3401, and amendments thereto, or fixed-return accounts of the Kansas public employees deferred compensation plan under K.S.A. 2010 Supp. 74-49b08 through 74-49b14, and amendments thereto; or (C) 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) the states in which such persons reside have one or more associations similar to the association created by this act; (iii) the persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state's guaranty association law. (Amended effective 7/1/2011).

Benefit Limits

§40-3008(o)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) in health insurance benefits: (i) $100,000 for coverages not defined as disability insurance or basic hospital, medical and surgical insurance or major medical insurance or long-term care insurance including any net cash surrender and net cash withdrawal values; (ii) $300,000 for disability insurance and $300,000 for long-term care insurance; (iii) $500,000 for basic hospital, medical and surgical insurance or major medical insurance; (C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (D) with respect to each payee of a structured settlement annuity (or beneficiary or beneficiaries of the payee if deceased), $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values; (E) however, in no event shall the association be obligated to cover more than: (1) An aggregate of $300,000 in benefits with respect to any one life as provided in paragraphs (A), (B), (C) and (D) of this subsection except with respect to benefits for basic hospital, medical and surgical insurance and major medical insurance under (o)(2)(B)(iii) of this subsection, in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or (2) with respect to one owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner; (Amended effective 7/1/2011).

Triggers

Discretionary Triggers

§40-3008(a). If a member insurer is an impaired insurer. (Amended effective 7/1/2011).

Mandatory Triggers

§40-3008(b) If a member insurer is an insolvent insurer. (Amended effective 7/1/2011).

Foreign Triggers

No separate provision. (Amended effective 7/1/2011).

"Impaired Insurer"

§40-3005(f) "Impaired insurer" means a member insurer which, after the effective date of this act, is not an insolvent insurer, and which: (1) Is deemed by the commissioner to be potentially unable to fulfill its contractual obligations; or (2) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction; (Amended effective 7/1/2011).

"Insolvent Insurer"

§40-3005(g). A member insurer which becomes insolvent and is placed under a final order of liquidation by a court of competent jurisdiction.

"Member Insurer"

§40-3005(h) "Member insurer" means any insurer licensed or holding a certificate of authority to transact in this state any kind of insurance for which coverage is provided under K.S.A. 40-3003, and amendments thereto, and includes any insurer whose license or certificate of authority in this state may have been suspended, revoked, nonrenewed or voluntarily withdrawn, but does not include: (1) A hospital or medical service organization regardless of whether such hospital or medical service organization is organized for profit or not-for-profit; (2) a health maintenance organization; (3) a fraternal benefit society; (4) a mandatory state pooling plan; (5) a mutual assessment company or any entity that operates on an assessment basis; (6) an insurance exchange, except a reciprocal or interinsurance exchange governed by the provisions of article 16 of chapter 40 of the Kansas Statutes Annotated, and amendments thereto; or (7) any entity similar to any of the organizations listed in paragraphs (1) through (6) inclusive; (Amended effective 7/1/2011).

Account Structure

§40-3006(a). Three accounts: health insurance, life insurance and annuity (excludes unallocated annuities)

Assessments

Assessment Limits

§40-3009(e)(1) The total of all assessments upon a member insurer for each account shall not in any one calendar year exceed 2% of such insurer's average premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the years in which the insurer became an impaired or insolvent insurer.

Assessment Classes

§40-3009(b) There shall be two classes of assessments, as follows: (1) Class A assessments shall be made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of sub-section (e) of K.S.A. 40-3012, and amendments thereto. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer. (2) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the association under K.S.A. 40-3008, and amendments thereto, with regard to an impaired or an insolvent insurer.

Interest Rate Adjustments

§40-3008(n)(3). Guaranty Association excludes from coverage: any portion of a policy or contract to the extent that the rate of interest on which it is based , or the interest rate, crediting rate or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (A) 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 (B) on and 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. (Amended effective 7/1/2011).

Tax Offsets

§40-3016. Yes. Up to 20% of assessment amount may be offset for next 5 years, beginning with the calendar year after the year the certificate of contribution is issued. Tax offset covers only Class B assessments.

Definition of Premium

§40-3005(m) “premiums” means amounts received on covered policies or contracts less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. Premiums does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under subsection (b) of K.S.A. 40–3003 , and amendments thereto, except that assessable premiums shall not be reduced on accounts for subsection (n)(3) of K.S.A. 40–3008 , and amendments thereto , relating to interest limitations and subsection (o)(2) of K.S.A. 40–3008 , and amendments thereto , relating to limitations with respect to any one life and any one contract holder. Premiums shall not include : (1) Any premiums on any unallocated annuity contract; or (2) any premiums in excess of $5,000,000 with respect to multiple nongroup policies of life insurance owned by one policyholder, regardless of the number of policies or contracts held by the policyholder and regardless of whether: (A) The policyholder is an individual, firm, corporation or other person; and (B) the persons insured are officers, managers, employees or other persons;

Advertising Prohibition

§40-3013a “Statement of existence of association not to be used to induce sales; description document, delivery to policyholder; disclaimer required; notice that policy is excluded from coverage under act” (a) No person, including an insurer, agent or affiliate of an insurer shall make, publish, disseminate, circulate or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Kansas life and health insurance guaranty association act. This § shall not apply to the Kansas life and health insurance guaranty association or any other entity which does not sell or solicit insurance.

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National Organization of Life & Health Insurance Guaranty Associations
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Phone Number: 703.481.5206