Disclosures Regarding Mid-West/the Alliance’s Business Relationship
Introduction
Set forth below is additional information concerning the Alliance for Affordable Services (“the Alliance”) and Mid-West National Life Insurance Company of Tennessee (“Mid-West”) and a description of the relationships between the two organizations.
More About the Alliance
The Alliance is a membership organization founded in 1981. The Alliance is organized under the laws of the District of Columbia and has its principal place of business at 29750 U.S. 19 North, Suite 205, Clearwater, Florida 33761. The Alliance is governed by a board of directors, the members of which are elected annually by Members of the Alliance. Members of the Alliance are entitled to vote on the selection of members of the board of directors at the annual meeting of the Alliance. The Alliance provides a variety of benefits to its Members. Alliance Members are required to pay monetary dues. Neither the Alliance nor any of the members of the Board of Directors have any direct or indirect ownership interest in HealthMarkets, Inc. f/k/a UICI, a Delaware corporation (“HealthMarkets”) or Specialized Association Services, Ltd. (“SAS”).
More about Mid-West and HealthMarkets
Mid-West is a Texas domiciled life and health insurance company with an administrative office located in North Richland Hills, Texas. Mid-West is licensed to issue health, life, and annuity insurance policies to consumers in all states except Maine, New Hampshire, New York and Vermont. Mid-West is an indirect wholly-owned subsidiary of HealthMarkets.
Effective April 5, 2006, HealthMarkets is a privately held company, the principal shareholders of which include investment affiliates of The Blackstone Group, Goldman Sachs Capital Partners, and DLJ Merchant Banking Partners (each of which is a private equity firm), certain members of current management, and independent insurance agents associated with the insurance company subsidiaries of HealthMarkets.
HealthMarkets remains subject to the reporting and certain other obligations under the Securities Exchange Act of 1934, as amended, and files annual, quarterly, and current reports, proxy statements, and other information with the Securities and Exchange Commission. You may inspect and copy such reports, proxy statements, and other information at the public reference facilities maintained by the Securities and Exchange Commission at:
| Room 1204 |
|
Citicorp Center |
| Judiciary Plaza |
OR |
500 West Madison Street |
| 450 Fifth Street, N. W. |
|
Chicago, IL 60661 |
| Washington, D.C. 20549 |
|
|
You may call the Securities and Exchange Commission at 1-800-SEC-0330 for further information about the public reference facilities. This material may also be obtained from the Securities and Exchange Commission’s worldwide web site at
http://www.sec.gov. HealthMarkets maintains a website at www.healthmarketsinc.com.
Relationships Between Mid-West and Affiliates and the Alliance
The Alliance and Mid-West are parties to an agreement, pursuant to which the Alliance has agreed to make available to its Members certain insurance products offered by Mid-West. The agreement may only be terminated by Mid-West or by the Alliance upon not less than one year’s advance notice to the other party.
The salesperson that a prospective Member or prospective insured speaks with about Alliance Membership and Mid-West insurance products serves both as a licensed insurance agent of Mid-West and as a Field Service Representative for new Members for the Alliance, for which he or she will receive compensation, from the Alliance or Mid-West, as the case may be. The insurance premiums derived from the sale of insurance go to Mid-West and the membership dues derived from the sale of the Alliance Memberships go to the Alliance. The salesperson acts on behalf of Mid-West (and not the Alliance) when discussing, explaining, and describing Mid-West insurance products and premiums. The salesperson acts on behalf of the Alliance (and not Mid-West) when discussing, explaining, and describing other Alliance benefits. The Alliance pays an affiliate of HealthMarkets for enrolling new Members in the Alliance and pays Mid-West and/or affiliates of Mid-West for ongoing membership marketing and administrative services and for certain Alliance Member benefits obtained from Mid-West or its affiliates.
SAS (which is controlled by the adult children of the late Ronald L. Jensen, HealthMarkets’ founder) is a party to an agreement with the Alliance to provide certain administrative services, including billing, administrative, fulfillment, and benefit procurement services. The Alliance pays SAS for these services. A subsidiary of HealthMarkets also sells new membership sales leads to the Field Service Representatives and video and print services to the Alliance. Neither HealthMarkets nor Mid-West has any ownership interest in SAS or in the Alliance.
Disclosures Regarding Association Group Insurance
About Association Group Insurance
The Alliance makes available to its members insurance coverage provided through Mid-West. The Alliance serves as the Association Group Master Policyholder of an association group insurance policy issued by Mid-West. In the event Mid-West approves your application, Mid-West will issue to you an individual insurance certificate evidencing your insurance coverage under the Association Group Master Policy. Under the law of most states, you may not acquire insurance coverage under an association group - type master policy unless you are also a member of an association. However, association membership is not required to maintain the insurance.
Underwriting
While the master policy issued by Mid-West to the Alliance is referred to as an association group policy, the law of most states permits Mid-West to review and underwrite your individual application, both at the time of your initial application and thereafter if you apply for coverage under a different master policy form issued by Mid-West or if you apply to add coverage under the policy form on which your initial coverage was issued. As a result, based on Mid-West’s assessment of your health, Mid-West may elect to accept coverage or decline to issue to you a certificate evidencing coverage under the Association Group Master Policy.
|
