Pennsylvania Code › Title 31 - INSURANCE › Part III - Credit Insurance › Chapter 73 - CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE › Section 73.141 - Credit insurance on lease transactions

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
General requirements
.
				Credit insurance may be provided in connection with lease transactions. This
				section supersedes other provisions of this chapter to the extent that the
				provisions would otherwise relate to credit insurance on lease
				transactions.
(b)
Identification
. Any credit insurance program designed for use
				with lease transactions shall be identified as such when filed with the
				Department in accordance with §
									73.136 (relating to filing of
				forms and rates).
(c)
Lease
				filing
. Insurers shall file a lease form and lease worksheet for each
				total monthly lease payment calculation method. An insurer, which has received
				approval of filed insurance forms, premiums and refund calculations for use
				with a particular monthly lease payment calculation method, may use the
				approved forms, premiums and refund calculations with any lease form providing
				for the same method. Approved insurance forms may be used with a different
				total monthly lease payment calculation method if the insurer files the lease
				form and receives approval of premium and refund calculations. The premium and
				refund calculations shall be consistent with the manner in which the newly
				filed total monthly lease payment is calculated.
(d)
Lease payment
				methodology
. Insurers shall include with the premium rate filing the
				methodology for calculating the actual monthly lease payment, including factors
				such as taxes, depreciation, interest, insurance premiums and service
				fees.
(e)
Coverage
				basis
. The decreasing credit life insurance benefit or credit life
				insurance with TPD benefit shall equal the decreasing term lease insurance
				amount, as defined in §
									73.103 (relating to definitions).
				If the residual amount of a lease transaction is insured, the insurance shall
				be provided on a level term basis.
(f)
Benefit amount
. The
				monthly A and H insurance benefit and the involuntary unemployment insurance
				benefit shall equal the amount of each monthly lease payment, subject to any
				maximum monthly benefit specified in the group policy and group certificate or
				individual policy. No credit A and H or involuntary unemployment insurance may
				be provided on the residual amount.
(g)
Payment to beneficiary
.
				If the credit life or TPD proceeds are applied to continue lease payments, the
				difference between the sum of the remaining payments plus the amount of level
				insurance, if applicable, and the sum of the present value of the remaining
				payments plus the present value of the residual payment, if applicable, shall
				be paid to the named beneficiary or the estate of the debtor regardless of
				whether the benefit is paid to the creditor as a lump sum or in installments.
				The present value shall be calculated using an interest rate not less than
				5%.
(h)
Single premium
				calculation
. If premiums for credit life insurance or credit life
				insurance with TPD benefit are payable on a single premium basis, the single
				premium shall equal the sum of the following:
(1) The single premium for decreasing
				insurance with an amount of initial insured indebtedness equal to the initial
				amount of decreasing lease insurance, as defined in §
										73.103, and with a number of equal
				monthly installments equal to the number of months in the lease term, less the
				number of monthly installments paid at the beginning of the lease.
(2) The single premium for level insurance
				with an amount of insurance equal to the amount of level lease insurance, as
				defined in § 73.103, and with a number of monthly installments equal to
				the number of months in the lease term.