California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 2 - Policy Forms and Other Documents › Article 6.8 - Credit Life and Credit Disability Insurance: Premium Rates › Section 2248.31 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
All words or phrases not defined in this Section shall have
					 the same meaning in these regulations as they have in Article 5.9 of Chapter 1
					 of Part 2 of Division 1 of the Insurance Code, starting with §
										779.1. As used in this
					 Article:
(a) "Actuarially equivalent"
				  means having a pattern of rates and benefits or of premium refunds and
				  remaining coverage which can be demonstrated to be equivalent to another
				  pattern of rates and benefits or of premium refunds and remaining coverage by
				  the application of contingency, interest and discount factors or
				  otherwise.
(b) "Class A Decreasing
				  Life" provides a life insurance benefit which decreases in accordance with the
				  scheduled decline in Closed End debt principal except that it covers any
				  delinquent payments, pursuant to Financial Code §§
										18291 and
				  22314(e).
				  This coverage is provided by standard policy forms ID numbers 6 through 9 in
				  Article 6.9 of this Subchapter.
(c)
				  A "Closed End" plan of indebtedness provides for repayment, in substantially
				  equal payments, of a principal amount for a term and at an interest rate, all
				  of which are fixed at the commencement of the term of the debt.
(d) "Credit Card" is an Open End plan of
				  indebtedness based upon the use of a "credit card", as defined in Civil Code
				  §
										1747.02(a).
(e) "Credit Union Open End" is an open end
				  plan of indebtedness extended by a credit union which provides for periodic
				  payments, often in substantially equal amounts, which may be adjusted from time
				  to time if the insured increases the outstanding debt or repays the loan faster
				  than required. Coverage of this plan of indebtedness is provided by standard
				  policy forms ID numbers 18 through 22 in Article 6.9 of this
				  Subchapter.
(f) "Earned premium" is
				  computed as follows:
(1) Where premiums are
				  collected on a single premium basis for the entire term of coverage:
Single premiums which became due the insurer during the
					 experience period
-
The unearned premium reserve* at the end of
							 the experience period
+
The unearned premium reserve* at the end of
							 the previous experience period
-
Premium refunds or adjustments resulting
							 from termination of coverage
=
Earned Premium (single premium basis)
_____________________________________________________________
* See subparagraph (4).
(2) Where premiums are payable monthly during
				  the term of coverage:
Monthly premiums paid the insurer during the experience
					 period
+
Monthly premiums due the insurer but unpaid
							 at the end of the experience period
-
Monthly premiums due the insurer but unpaid
							 at the end of the previous experience period
-
Unearned premium reserve* at the end of the
							 experience period
+
Unearned premium reserve* at the end of the
							 previous experience period
-
Premium refunds or adjustments resulting
							 from termination of coverage
______________________________________________________________________
=
Earned Premium (monthly basis)
*See subparagraph (5).
(3) Dividends, experience refunds or any
				  other reductions of premium after issuance of coverage shall not be subtracted
				  from earned premium nor included in benefits.
(4) The unearned premium reserve for single
				  premium life plans equals the single premium for the amount and term of the
				  remaining indebtedness. The unearned premium reserve for single premium
				  disability plans is the single premium for the sum of the remaining loan
				  payments and the remaining term of the loan.
(5) The unearned premium reserves for monthly
				  premium life plans and disability plans equal the unearned portions of the
				  gross premiums in force. This depends on the distribution of due dates through
				  the month. The calculation shall be made consistently from month to month. For
				  example, the unearned premium reserve for monthly business can only be zero if
				  all due dates are at the first of the month.