Washington Administrative Code › Title 284 - Insurance Commissioner, Office of the › Chapter 284-34 - Credit life and credit accident and health insurance › Section 284-34-170 - What are the standards for credit accident and health insurance rates?

Current through Register Vol. 24-14, July 15, 2024
(1) Subject to WAC
			 284-34-180 and
			 284-34-220, the commissioner
			 presumes the prima facie rates shown below meet the requirements of WAC
			 284-34-140. An insurer may use
			 these rates without filing additional actuarial support.
(a) Single-premium basis for the entire
			 period of debt: The prima facie rate per one hundred dollars of initial insured
			 debt is shown in the table below. Rates for monthly periods other than those
			 listed must be interpolated:
Nonretroactive
Benefits
Retroactive Benefits
No. of Months
14-
day
30-
day
7-
day
14-
day
30-
day
1
0.08
0.00
0.27
0.21
0.00
3
0.49
0.18
0.71
0.66
0.47
6
0.95
0.47
1.16
1.12
0.87
12
1.49
0.86
1.85
1.77
1.39
18
1.83
1.13
2.38
2.26
1.76
24
2.07
1.35
2.81
2.65
2.04
30
2.25
1.52
3.17
2.97
2.28
36
2.41
1.67
3.48
3.25
2.48
48
2.65
1.90
3.98
3.69
2.80
60
2.83
2.09
4.38
4.05
3.05
72
2.97
2.24
4.66
4.33
3.25
84
3.09
2.37
4.87
4.57
3.42
96
3.18
2.47
5.04
4.77
3.56
108
3.26
2.56
5.17
4.93
3.68
120
3.32
2.63
5.26
5.07
3.77
(b)
			 Monthly outstanding balance basis for closed-end debt: Insurers must compute
			 premiums according to:
(i) A formula approved
			 by the commissioner that produces rates actuarially consistent with the single
			 premium rates in (a) of this subsection; or
(ii) This formula:
n
OPn = 10
							 SPn x n/(SIGMA an - t + 1)
t = 1
where at = (1 - 1/(1 +
							 i)t)/i.
SPn = Single premium rate per one
				hundred dollars of initial insured debt repayable in n equal monthly
				installments as shown in (a) of this subsection.
OPn = Monthly outstanding balance
				premium rate per one thousand dollars.
n = The number of months in the term of the insurance.
i = The monthly loan interest rate.
(c) Insurers must calculate single
			 premium rates using the actuarial equivalent of (a) of this subsection.
(i) If an insurer provides coverage for
			 constant maximum indemnity for a given period of time, the commissioner
			 presumes premiums based on the rates in (a) of this subsection are earned
			 according to the rule of anticipation.
(ii) The insurer may estimate the portion of
			 the single premium earned in the first month of coverage by the average of the
			 pro rata earned premium and the "sum of the digits" (also called the "Rule of
			 78") earned premium.
(iii) If an
			 insurer provides critical period coverage with a benefit period of at least
			 twelve months or the remaining term of the loan:
(A) The rates must be actuarially consistent
			 with the rates for full term benefits in (a) of this subsection.
(B) To ensure actuarial consistency, the
			 insurer may calculate conversion ratios based on the 1974 basic tables of
			 credit A&H claim costs published in the NAIC Proceedings -- 1975 Vol. I,
			 pages 675-691, or other suitable morbidity table.
(d) Lump sum disability coverage:
(i) The commissioner presumes the monthly
			 premium charges per one hundred dollars of insured balance shown below meet the
			 requirements of WAC
			 284-34-140. An insurer may use
			 these rates without filing additional actuarial support:
(A) For a ninety-day qualifying period,
			 fifteen cents; and
(B) For a one
			 hundred eighty-day qualifying period, nine cents.
(ii) The insurer must provide a benefit equal
			 to the insured balance on the date of disability. The insurer must return
			 disability premium charges to the debtor for months following the billing month
			 when the disability occurred.
(iii)
			 The insurer may provide lump sum benefits on a single premium basis using the
			 credit life insurance formula in WAC
			 284-34-150(2)
			 and the rates in (d)(i) of this subsection in place of
			 Op/10.