8 V.S.A. § 4153
2021 Vermont Statutes|Title 8 - Banking and Insurance|Chapter 112 - Life and Health Insurance Guaranty Association|§ 4153. Scope

§ 4153. Scope|(a) This subchapter shall provide coverage for the policies and contracts specified in subsection (b) of this section:  (1) To persons who, regardless of where they reside (except for nonresident certificate holders under group policies or contracts and except for payees and beneficiaries of structured settlement annuities as specified in subdivision (3) of this subsection), are the beneficiaries, assignees, or payees of the persons covered under subdivision (2) of this subsection. (2) To persons who are owners of or certificate holders under such policies or contracts or, in the case of unallocated annuity contracts, to the persons who are the contract holders; and who  (A) are residents of this State, or (B) are not residents of this State, but only if all of the following conditions are met:  (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 subchapter; and (iv) such persons are not eligible for coverage by such associations.   (3) To persons who are payees under structured settlement annuities, or beneficiaries of such deceased payees, but only if the payees:  (A) are residents of this State, regardless of where the contract owners reside; or (B) are not residents of this State, but only if both of the following conditions are met:  (i)(I) the contract owners of such structured settlement annuities are residents of this State; or  (II) the contract owners of such structured settlement annuities are not residents of this State, but only if:  (aa) the insurers which issued such structured settlement annuities are domiciled in this State; and (bb) the states in which such contract owners reside have associations similar to the Association created by this subchapter; and   (ii) Neither the payees, beneficiaries, nor the contract owners are eligible for coverage by the associations of the states in which such payees or contract owners reside.     (b)(1) This subchapter shall provide coverage to the persons specified in subsection (a) of this section for direct, nongroup life, health, annuity, and supplemental policies or contracts, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by this subchapter. Annuity contracts and certificates under group annuity contracts include guaranteed investment contracts, guaranteed interest contracts, guaranteed accumulation contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement agreements, lottery contracts, and any immediate or deferred annuity contracts.  (2) This subchapter 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, 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:  (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 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;  (D) 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 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, Pub. L. No. 93-406, as may be 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; (G) any unallocated annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation; (H) any portion of any unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan, or government lottery; (I) any portion of a policy or contract 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 has not been credited to the policy or contract, or 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 chapter, whichever is earlier. 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 are not subject to forfeiture under this subdivision, the interest or change in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture; and (J) any policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant Medicare Part C or Part D of subchapter XVIII, Chapter 7 of Title 42 of the United States Code, or any regulations issued pursuant thereto. (Added 1971, No. 170 (Adj. Sess.), § 2, eff. April 27, 1972; amended 1993, No. 55, § 1, eff. June 3, 1993; 2009, No. 137 (Adj. Sess.), §§ 7a, 7b, eff. May 29, 2010.)