New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter VII - Credit And Creditor Insurance › Part 187 - Credit Unemployment Insurance › Section 187.12 - 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 will apply to credit insurance on open-end loans or
				charge plans:
(1) Definition of open-end loan
				or charge plan. An open-end loan or charge plan is a line of credit loan, a
				revolving charge plan or any other open-end self-replenishing credit
				arrangement between the creditor and one of its customers which may be drawn
				upon from time to time by the customer without renegotiating the lending
				agreement. The customer may repay the full outstanding balance at any time, or
				a specified minimum portion of the indebtedness (e.g., five percent, or a
				minimum of $10).
(2) Debtor's
				option for insurance. 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 must 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.
(3) Disclosure to debtors--policies and
				certificates of insurance. The requirements in section
				187.4(a)
				and (d)  of this Part for policies,
				certificates, applications, 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.
(4) Amount of insurance. If at any time the
				insured debtor has no outstanding indebtedness, the amount of his insurance
				will be zero. Subject to any maximums, the amount of a periodic credit
				unemployment insurance benefit may not exceed a specified percentage, not to
				exceed the greater of the amount of the minimum payment which the debtor is
				required to make on the debtor's loan or charge plan as of the monthly billing
				or statement date on or immediately preceding the date his unemployment or
				labor dispute work stoppage commenced, or a specified percentage, not to exceed
				six percent, of the debtor's unpaid indebtedness balance as of the date the
				debtor's unemployment or labor dispute work stoppage commenced. The payment of
				benefits may not be made for a period of unemployment extending beyond the date
				the insured portion of the outstanding indebtedness of the insured debtor's
				loan or charge plan becomes zero.
(5) Termination of insurance. 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
				187.5(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.
(6) Additional rules.
(i) Credit unemployment insurance, may
				include an actively at work requirement. This provision may apply separately to
				each new indebtedness incurred by the debtor, and may not be reapplied to the
				total indebtedness balance each time a new indebtedness is incurred.
(ii) The unemployment insurance shall exclude
				from benefits, indebtedness incurred by the debtor while he was unemployed. A
				premium may not be charged on any new indebtedness incurred by the debtor while
				he is unemployed, unless included in the claim benefit. Any premium paid by the
				insured which is subsequently refunded will not be considered to have been
				charged to the debtor.
(iii) Total
				benefits for any period of unemployment may be limited to an amount stated or
				described in the policy.
(iv) The
				insurance may include a reinstatement provision for a debtor who has been paid
				the full benefits of the insurance.
(7) Payment of premiums and insurance
				charges. 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;
				or
(ii) the indebtedness balance in
				the debtor's account on the billing date; or
(iii) by any other method as the
				Superintendent of Insurance may approve.
(8) The charge for insurance may be added to
				the debtor's indebtedness balance periodically and must be shown separately
				from any other charge. If the credit unemployment insurance is written as a
				package with other credit insurance, then monthly charge may be shown either
				separately or as a package, however the rates for each coverage should be
				disclosed separately. If the credit unemployment insurance is written along
				with credit disability insurance but not as a package then each charge must be
				displayed separately. Any credit life insurance premium must be displayed
				separately.
(9) Premium and
				insurance charge rates. Open-end loans or charge plans provide a minimum
				payment which the debtor is required to make on his indebtedness balance. While
				the amount of the minimum payment may change each time new indebtedness is
				incurred, each new minimum payment sets a maximum number of months over which
				the debtor must repay his indebtedness. The premium rate for credit
				unemployment insurance on open-end loans may be:
(i) the appropriate premium rate determined
				by section
				187.7(c) 
				of this Part, for the initial maximum number of months over which the debtor is
				required to repay the balance of his indebtedness after new indebtedness is
				incurred;
(ii) the appropriate
				premium rate for the maximum number of months remaining to be paid on the
				indebtedness balance on the billing date;
(iii) the actuarially determined weighted
				average term rate for the aggregate of the maximum repayment terms of all
				insured loans or charge plans of the creditor; or
(iv) any other plan approved by the
				Superintendent of Insurance.