Ala. Admin. Code r. 482-1-117-.06
Current through Register Vol. 43, No. 1, October 31, 2024
Section 482-1-117-.06 - Amount Of Consumer Credit Insurance(1) Credit Life Insurance. (a) The maximum amount of credit life insurance that may be written in connection with a consumer loan or consumer credit sale which is to be repaid in substantially equal installments shall at no time exceed the greater of the following: 1. The approximate unpaid balance of the debt, excluding unearned finance charges, if any.2. The approximate unpaid scheduled balance of the debt, excluding unearned finance charges, if any, plus the amount of one scheduled payment.(b) For a lease transaction payable in substantially equal monthly payments plus a residual payment (whether optional or mandatory), uniform decreasing credit life insurance benefits may be provided in an amount not exceeding the sum of the remaining monthly payments and the residual amount of a lease transaction may be insured on a level term basis.(c) The amount of credit life insurance on single principal payment consumer credit transactions, irrespective of the scheduled interest payments, shall not exceed the approximate amount of the gross debt.(d) If a premium is assessed to the debtor on a monthly basis and is based on the approximate amount of the outstanding unpaid balance of the debt, then the amount payable at the time of loss shall be the approximate unpaid balance of the debt on the date of death.(e) Notwithstanding the provisions of Subparagraph (a), (b), (c) and (d) of this Paragraph (1), the amount of the premium and the corresponding amount of the death benefit may be subject to policy limits.(f) A single policy or group certificate may provide for joint credit life insurance coverage on both the principal debtor and one co-debtor to the consumer credit transaction.(2) Credit Disability Insurance.(a) For closed-end credit transactions, the total amount of periodic indemnity benefit payable by credit disability insurance in the event of disability as defined in the policy shall not exceed the approximate amount of the gross debt. The amount of each periodic indemnity benefit payment shall not exceed the approximate amount of the gross debt divided by the number of scheduled periodic installments.(b) The amount of insurance written in connection with an open-end credit plan shall not exceed the approximate unpaid balance of the debt from time to time using the periodic indemnity benefit payment as the amount of each payment. Subject to any policy maximums, the periodic indemnity benefit must not be less than the creditor's minimum repayment schedule.(c) Credit disability insurance may be subject to a limitation on the total number of monthly indemnity payments that could result in the indemnity payments terminating prior to the end of the term of insurance.(d) For a lease transaction payable in substantially equal monthly payments plus a residual payment (whether optional or mandatory), the monthly disability benefit shall not exceed the amount of each monthly lease payment. No credit disability coverage shall be provided on the residual amount.(e) Except to the extent prohibited by regulation of the Superintendent, a single policy or group certificate may provide for joint disability insurance coverage on both the principal debtor and one co-debtor to the consumer credit transaction.(3) General Provisions. (a) Consumer credit insurance coverages may be written for any amount equal to or less than the maximum amount specified in Paragraphs (1) and (2) of this rule and for any term consistent with the provisions in Rule 482-1-117-.07.(b) Consumer credit insurance coverages may be written on lease transactions, variable rate credit transactions, balloon loans, or any other credit transaction in any combination of decreasing or level amounts of insurance which are not inconsistent with this chapter. Author: Reyn Norman, Associate Counsel
Ala. Admin. Code r. 482-1-117-.06
New Rule: October 14, 1999; effective November 1, 1999. Filed for codification in the Alabama Administrative Code by the Department of Insurance on January 17, 2003, pursuant to the Code of Ala. 1975, § 27-7-43.Statutory Authority:Code of Ala. 1975, § 27-2-17.