New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter VII - Credit And Creditor Insurance › Part 185 - Credit Life Insurance And Credit Accident And Health Insurance › Section 185.13 - Open-end loans and charge plans

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
				These rules, and the provisions of all other sections of this Part not in
				conflict with the following, shall apply to credit insurance on open-end loans
				or charge plans:
(1) If a premium or charge
				for the insurance is to be made to the debtor by the creditor, insurance may be
				issued on a debtor only if he elects in writing to become insured and agrees to
				pay the premium or charge for the insurance. The debtor shall be given the
				right to discontinue the insurance at any time by advance notice to the
				creditor. If the insurance benefits are reduced, or if the premium rate for the
				insurance is increased, the creditor shall give the insured debtors advance
				notice of the change and remind them of their right to discontinue the
				insurance.
(2) The disclosure
				requirements in section
				185.5(a)
				or (d)  of this Part for policies,
				certificates, or notices of proposed insurance shall apply only when the credit
				insurance on the open-end loan or charge plan is first issued. A new policy or
				certificate of insurance need not be issued each time the insured debtor incurs
				indebtedness on the account.
(3) If
				the insured person has incurred no indebtedness or if at any time he has repaid
				all outstanding indebtedness, the amount of his insurance will be zero. Subject
				to any maximums, the amount of credit life insurance on an insured debtor shall
				be the unpaid indebtedness balance owing by him on the date of his death,
				including any amount received by him during his lifetime and recorded after his
				death, including any accrued interest. The amount of a periodic credit
				disability insurance benefit shall not exceed the greater of the amount of the
				minimum payment which the debtor is required to make on his loan or charge plan
				on the date his disability commenced, or a specified percentage, not to exceed
				six percent, of the debtor's unpaid indebtedness balance on the date his
				disability commenced. For credit disability policies with a maximum amount of
				insurance of $2,500 or less, the benefit may be written for a lump sum payment
				with a waiting period of 90 days and the amount payable equal to the amount
				outstanding on the day of disability.
(4) A debtor's insurance may be terminated on
				the earliest of any of the following dates, but such termination of insurance
				shall not prejudice a claim existing on date of termination:
(i) on the date requested by the debtor or
				the date he fails to pay any required premium or charge on insurance;
(ii) on the premium billing date coinciding
				with or next following the date the debtor attains a stated age, which will not
				be less than age 66;
(iii) on the
				date the open-end loan or charge plan is terminated;
(iv) on the date the debtor is in default, as
				defined by the creditor's rules;
(v) subject to the notice requirement of
				section
				185.5(h) 
				of this Part, on the date the group policy is terminated; or
(vi) on the date the policyholder terminates
				coverage on all revolving accounts of the same class as that held by the
				debtor, subject to a minimum 31 day notice to all debtors.
(5) Credit disability insurance may include
				the preexisting exclusion specified in section
				185.5(e) 
				of this Part. This provision shall apply separately to each new indebtedness
				incurred by the debtor, and shall not be reapplied to the total indebtedness
				balance each time a new indebtedness is incurred.
(6) The disability insurance shall exclude
				from benefits, indebtedness incurred by the debtor while he was disabled. An
				identifiable charge shall not be charged on any new indebtedness incurred by
				the debtor while he is receiving disability benefits, unless the forms clearly
				indicate that the debtor may request the coverage to terminate and that such
				termination will in no way affect a claim incurred prior to the termination.
				Any identifiable charges paid by the insured after the date of such termination
				are subject to the refund requirements of section
				185.8 
				of the Part.
(7) Total benefits for
				any period of disability may be limited to any or all of the following:
(i) an amount stated in the policy;
(ii) an amount described in the
				policy;
(iii) a specified number of
				payments; or
(iv) until a specified
				age.
If subparagraph (iv) of this paragraph is used then such age
				  may not be less than 66 and benefits may not terminate because of the
				  attainment of the specified age before the earlier of either when 12 months of
				  benefits have been paid or when the benefits would have stopped if the
				  termination due to age did not appear.
(8) The insurance may include a reinstatement
				provision for a debtor who has been paid the full benefits of the insurance. In
				the event the debtor has been paid the full benefits, the insurer shall so
				notify the insured, describe the circumstances under which he would be again
				eligible for benefits, describe the amount of such benefits if less than full
				benefits are available and give the insured 90 days to cancel coverage with a
				full refund of any identifiable charges made during the 90 day
				period.
(9) Insurance on a debtor
				for an open-end loan or charge plan, may only be provided on a periodic
				outstanding balance premium basis. The periodic charge may be applied to
				either:
(i) the average daily indebtedness
				balance in the debtor's account during the billing period;
(ii) the indebtedness balance in the debtor's
				account on the billing date; or
(iii) by any other method as the
				superintendent may approve.
The method used shall be set forth in the group policy and
				  certificate.
(10) The charge for insurance may be added to
				the debtor's indebtedness balance periodically and shall be shown separately
				from any other charge. If the charges for credit life, credit accident and
				health and credit unemployment insurance are not shown separately, then the
				forms must indicate either that the debtor will be informed of the current
				rates in writing at least every 15 months or that the debtor will be informed
				in writing as to all of the rates within two months of a change in any of the
				rates.