Mass. Gen. Laws ch. 255, sec. 12G — MA Code / Part III / Title IV / Chapter 255 / Section 12G
Credit life or accident and health or involuntary unemployment insurance charges; prepayment; refunds; death benefits; disclosure statements; violations
Status: in_force

Section 12G. Except as otherwise provided in section ten of chapter two hundred and fifty-five B, section fourteen A of chapter two hundred and fifty-five C and subsection C of section twenty-six of chapter two hundred and fifty-five D, in the event the charge or any portion thereof for life insurance under a policy issued pursuant to clause (c) of the first paragraph of section one hundred and thirty-three of chapter one hundred and seventy-five or for accident and health insurance under a policy issued pursuant to clause (j) of the first sentence of subdivision (A) of section one hundred and ten of chapter one hundred and seventy-five, or for involuntary unemployment insurance under a policy issued pursuant to clause (a) of section one hundred and seventeen D of chapter one hundred and seventy-five which unless otherwise authorized shall be the only types of insurance authorized in connection with a loan for personal, family or household purposes, is paid by the borrower or borrowers to the creditor, it shall not be deemed to constitute a charge in violation of sections ninety A, one hundred, one hundred and fourteen A, and one hundred and fourteen B of chapter one hundred and forty. The creditor may make a charge for said life insurance based on a rate which shall not exceed the premium charged by the insurer pursuant to said insurer's schedule or schedules of premium rates currently on file with the commissioner of insurance for said insurance on obligations to said creditor pursuant to the provisions of section one hundred and seventeen C of chapter one hundred and seventy-five. The amount of said insurance shall at no time exceed the greater of the scheduled or actual amount owing on the loan exclusive of unearned finance charges. Said charge may be collected either as a single premium on scheduled insured balances or periodically on actual monthly insured balances. The creditor may make a charge for said accident and health insurance or said involuntary unemployment insurance based on a rate which shall not exceed the premium charged by the insurer pursuant to said insurer's schedule or schedules of premium rates currently on file with the commissioner of insurance for said insurance on obligations to said creditor pursuant to the provisions of said section one hundred and seventeen C or section one hundred and seventeen D of said chapter one hundred and seventy-five. Said charge may be collected either as a single premium on scheduled insured balances or periodically on outstanding balance basis, using a monthly term rate that is actuarially consistent with the applicable single premium rate filed with said commissioner, which monthly rate shall be applied each month to the sum of the remaining insured monthly benefits. For interest bearing loans, other than pre-computed loans, a uniform monthly rate filed with said commissioner may be applied to the remaining monthly loan balances of all insured loans, exclusive of unearned finance charges, which uniform monthly rate shall produce, for the aggregate of all said insured loans, an aggregate premium that is actuarially consistent with the aggregate premium that would result from using said applicable single premium rates filed with said commissioner applied to the total of the monthly benefits on all said insured loans. All group accident and health insurance policies shall have a waiting period of thirty days and shall have benefits which are not retroactive. No group involuntary unemployment insurance policy shall have a waiting period in excess of thirty-one days. In the event of prepayment of the loan, there shall be a refund of any unearned charges for said life insurance or accident and health insurance or involuntary unemployment insurance computed on a method which is at least as favorable to the borrower or borrowers as the actuarial method, which for single premiums shall be defined as a refund of unearned premium equal to the premium cost of coverage equal to the remaining scheduled benefits for a term equal to the remaining period from the date of said prepayment to the originally scheduled termination date of coverage, computed at the schedule of rates in effect when the charge for said insurance was made. If said prepayment is made other than on an installment due date it shall be deemed to have been made on the first installment due date if said prepayment is made before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of said prepayment. The amount of death benefit payable shall be computed as of the date of death and shall, subject to any dollar limit specified in the group policy, include not less than the equivalent of six past due monthly payments on the loan if and to the extent that payments are past due whether from delinquency, deferral, extension or other reason. No anticipated delinquency value shall be included in the amount of coverage on which said life insurance premiums are calculated. In the computation of said benefit, the assumed amount of said insurance shall not be less than the lesser of (1) the maximum amount of said insurance specified in the group policy, or (2) the actual outstanding principal balance of the indebtedness including the equivalent of up to six past due monthly payments if and to the extent that payments are past due. Notwithstanding the previous sentence, in the event an excess charge is made for said insurance, said amount of death benefit shall at no time be less than the amount for which a charge has been paid by the insured. Every disclosure statement under the provisions of chapter one hundred and forty D involving said life insurance or accident and health insurance or involuntary unemployment insurance issued pursuant to this section shall contain all or part of the following language, corresponding to the types of insurance offered, printed in ten point boldface type: YOU CANNOT BE DENIED CREDIT SIMPLY BECAUSE YOU CHOOSE NOT TO BUY CREDIT INSURANCE. CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE AND CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED TO OBTAIN CREDIT. INSURANCE WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL CHARGE. The enrollment for said insurance shall not be a condition of obtaining financing nor shall it be a condition of entering into a loan. The denial of credit for failure to enroll for said insurance shall constitute a violation of chapter ninety-three A and chapter one hundred and seventy-six D. Said involuntary unemployment insurance shall not be offered in connection with a consumer credit transaction subject to this section until the credit decision has been made and communicated to the credit applicant; provided, however, nothing in this sentence shall prohibit making pamphlets available to credit applicants, responding to questions by credit applicants concerning said insurance, or providing credit applications which contain a written offer of insurance to credit applicants. This section shall not apply to insurance for which no identifiable charge is made to the borrower or borrowers. This section shall not apply to said life insurance or accident and health insurance in connection with a loan for personal, family or household purposes secured by a first lien on real property; provided, however, this section shall apply to said involuntary unemployment insurance in connection with a loan for personal, family or household purposes secured by a first lien on real property.

Section 12G. Except as otherwise provided in section ten of chapter two hundred and fifty-five B, section fourteen A of chapter two hundred and fifty-five C and subsection C of section twenty-six of chapter two hundred and fifty-five D, in the event the charge or any portion thereof for life insurance under a policy issued pursuant to clause (c) of the first paragraph of section one hundred and thirty-three of chapter one hundred and seventy-five or for accident and health insurance under a policy issued pursuant to clause (j) of the first sentence of subdivision (A) of section one hundred and ten of chapter one hundred and seventy-five, or for involuntary unemployment insurance under a policy issued pursuant to clause (a) of section one hundred and seventeen D of chapter one hundred and seventy-five which unless otherwise authorized shall be the only types of insurance authorized in connection with a loan for personal, family or household purposes, is paid by the borrower or borrowers to the creditor, it shall not be deemed to constitute a charge in violation of sections ninety A, one hundred, one hundred and fourteen A, and one hundred and fourteen B of chapter one hundred and forty.

The creditor may make a charge for said life insurance based on a rate which shall not exceed the premium charged by the insurer pursuant to said insurer's schedule or schedules of premium rates currently on file with the commissioner of insurance for said insurance on obligations to said creditor pursuant to the provisions of section one hundred and seventeen C of chapter one hundred and seventy-five. The amount of said insurance shall at no time exceed the greater of the scheduled or actual amount owing on the loan exclusive of unearned finance charges. Said charge may be collected either as a single premium on scheduled insured balances or periodically on actual monthly insured balances.

The creditor may make a charge for said accident and health insurance or said involuntary unemployment insurance based on a rate which shall not exceed the premium charged by the insurer pursuant to said insurer's schedule or schedules of premium rates currently on file with the commissioner of insurance for said insurance on obligations to said creditor pursuant to the provisions of said section one hundred and seventeen C or section one hundred and seventeen D of said chapter one hundred and seventy-five. Said charge may be collected either as a single premium on scheduled insured balances or periodically on outstanding balance basis, using a monthly term rate that is actuarially consistent with the applicable single premium rate filed with said commissioner, which monthly rate shall be applied each month to the sum of the remaining insured monthly benefits. For interest bearing loans, other than pre-computed loans, a uniform monthly rate filed with said commissioner may be applied to the remaining monthly loan balances of all insured loans, exclusive of unearned finance charges, which uniform monthly rate shall produce, for the aggregate of all said insured loans, an aggregate premium that is actuarially consistent with the aggregate premium that would result from using said applicable single premium rates filed with said commissioner applied to the total of the monthly benefits on all said insured loans. All group accident and health insurance policies shall have a waiting period of thirty days and shall have benefits which are not retroactive. No group involuntary unemployment insurance policy shall have a waiting period in excess of thirty-one days.

In the event of prepayment of the loan, there shall be a refund of any unearned charges for said life insurance or accident and health insurance or involuntary unemployment insurance computed on a method which is at least as favorable to the borrower or borrowers as the actuarial method, which for single premiums shall be defined as a refund of unearned premium equal to the premium cost of coverage equal to the remaining scheduled benefits for a term equal to the remaining period from the date of said prepayment to the originally scheduled termination date of coverage, computed at the schedule of rates in effect when the charge for said insurance was made. If said prepayment is made other than on an installment due date it shall be deemed to have been made on the first installment due date if said prepayment is made before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of said prepayment.

The amount of death benefit payable shall be computed as of the date of death and shall, subject to any dollar limit specified in the group policy, include not less than the equivalent of six past due monthly payments on the loan if and to the extent that payments are past due whether from delinquency, deferral, extension or other reason. No anticipated delinquency value shall be included in the amount of coverage on which said life insurance premiums are calculated. In the computation of said benefit, the assumed amount of said insurance shall not be less than the lesser of (1) the maximum amount of said insurance specified in the group policy, or (2) the actual outstanding principal balance of the indebtedness including the equivalent of up to six past due monthly payments if and to the extent that payments are past due. Notwithstanding the previous sentence, in the event an excess charge is made for said insurance, said amount of death benefit shall at no time be less than the amount for which a charge has been paid by the insured.

Every disclosure statement under the provisions of chapter one hundred and forty D involving said life insurance or accident and health insurance or involuntary unemployment insurance issued pursuant to this section shall contain all or part of the following language, corresponding to the types of insurance offered, printed in ten point boldface type:

YOU CANNOT BE DENIED CREDIT SIMPLY BECAUSE YOU CHOOSE NOT TO BUY CREDIT INSURANCE. CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE AND CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED TO OBTAIN CREDIT. INSURANCE WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL CHARGE.

The enrollment for said insurance shall not be a condition of obtaining financing nor shall it be a condition of entering into a loan. The denial of credit for failure to enroll for said insurance shall constitute a violation of chapter ninety-three A and chapter one hundred and seventy-six D.

Said involuntary unemployment insurance shall not be offered in connection with a consumer credit transaction subject to this section until the credit decision has been made and communicated to the credit applicant; provided, however, nothing in this sentence shall prohibit making pamphlets available to credit applicants, responding to questions by credit applicants concerning said insurance, or providing credit applications which contain a written offer of insurance to credit applicants.

This section shall not apply to insurance for which no identifiable charge is made to the borrower or borrowers. This section shall not apply to said life insurance or accident and health insurance in connection with a loan for personal, family or household purposes secured by a first lien on real property; provided, however, this section shall apply to said involuntary unemployment insurance in connection with a loan for personal, family or household purposes secured by a first lien on real property.