Pennsylvania Code › Title 31 - INSURANCE › Part III - Credit Insurance › Chapter 73 - CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE › Section 73.142 - Credit insurance on fixed residual loans

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
General requirements
.
				Credit insurance may be provided in connection with motor vehicle fixed
				residual value financing. This section supersedes other provisions of this
				chapter to the extent that the provisions would otherwise relate to credit
				insurance on fixed residual loans.
(b)
Identification
. A credit
				insurance program designed for use with fixed residual value financing shall be
				identified as such when filed with the Department in accordance with §
									73.136 (relating to filing of
				forms and rates).
(c)
Filing requirement
. Every insurer shall file a fixed residual
				value financing loan form and the formula demonstrating the manner in which the
				actual installment payment will be calculated for each installment payment
				calculation method.
(d)
Level life coverage
. If the fixed residual value amount is
				insured, life insurance coverage shall be provided on a level term
				basis.
(e)
A and H and
				involuntary unemployment coverage
. The monthly A and H insurance
				benefit and the involuntary unemployment insurance benefit may not exceed the
				amount of each monthly installment payment. No credit A and H or involuntary
				unemployment insurance may be provided on the residual amount.
(f)
Single premium gross
				calculation
. If premiums for credit life insurance or credit life
				insurance with TPD benefit are payable on a single premium basis, when the
				benefit is the gross unpaid indebtedness, the single premium shall equal the
				sum of the single premium for decreasing insurance with an amount of initial
				insured gross unpaid indebtedness equal to the sum of the schedule of
				installment payments and the single premium for level insurance with an amount
				of insurance equal to the fixed residual value.
(g)
Single premium net
				calculation
. If premiums for credit life insurance or credit life
				insurance with TPD benefit are payable on a single premium basis, when the
				benefit is the net unpaid indebtedness, the single premium shall equal the sum
				of the single premium for decreasing insurance based on an initial amount
				financed minus an amount equal to the fixed residual value, and the single
				premium for level insurance with an amount of insurance equal to the fixed
				residual value.
(h)
Payment
				to beneficiary
. If the insurance benefit is the gross unpaid
				indebtedness, and if the life insurance or TPD proceeds are applied to continue
				the installment, the group policy and group certificate or individual policy
				providing the coverage shall provide that 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 fixed residual value 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 of at least 5%.