Ala. Admin. Code r. 482-1-117-.07

Current through Register Vol. 43, No. 1, October 31, 2024

Section 482-1-117-.07 - Term Of Consumer Credit Insurance

(1) Effective Date of Coverage.

(a) For consumer credit insurance made available to and elected by the debtor before or contemporaneous with a credit transaction to which the insurance relates, the term of the insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, except that when evidence of individual insurability is required and such evidence is received by the insurer more than thirty (30) days after the date when the debtor becomes obligated to the creditor, the term of the credit insurance may commence on the date on which the insurance company determines the evidence to be satisfactory.

(b) For insurance coverage made available to and elected by the debtor on a date subsequent to the date of the consumer credit transaction to which the insurance relates, the insurance shall, subject to acceptance by the insurer, commence on a date not earlier than the date the election is made by the debtor nor later than thirty (30) days following the date on which the insurance company accepts the risk for coverage, according to an objective method such as one related to a particular date within a billing or repayment cycle or a calendar month.

(c) Notwithstanding the provisions of Subparagraphs (a) and (b) of this Paragraph (1), when a group policy provides coverage with respect to debts existing on the policy effective date, the insurance relating to the debt shall not commence before the effective date of the group policy.

(d) No charge for insurance shall be retained with respect to any time prior to commencement of the consumer credit insurance to which the charge is related. If a charge is made and the debtor's application for insurance is subsequently rejected or delayed, an appropriate refund of the premium charge shall be made to the debtor within thirty (30) days after a determination that the refund is due.

(2) Termination Date of Coverage.

(a) The term of any consumer credit insurance shall not extend beyond the termination date specified in the policy. The termination date of insurance may precede, coincide with or follow the scheduled maturity date of the debt to which it relates, subject to any other requirements and restrictions of this chapter.

(b) The term of any consumer credit insurance shall not extend more than fifteen (15) days beyond the scheduled maturity date of the debt except when extended without additional cost to the debtor or except when extended pursuant to a written agreement, signed by the debtor, in connection with a variable interest rate credit transaction or a deferral, renewal, refinancing or consolidation of debt. Notwithstanding the foregoing sentence, no insurer shall be bound to offer such extensions unless required by provisions of previously-issued policies or certificates.

(c) If the debt is renewed, refinanced or consolidated prior to the scheduled termination date of the insurance, any insurance in force shall be terminated before any new insurance may be written in connection with the renewed, refinanced, or consolidated debt.

(d) In all cases of termination of insurance prior to the scheduled termination of the insurance, an appropriate refund or credit to the debtor shall be made of any unearned insurance premium or charge paid by the debtor for a term of insurance after the date of the termination, except that no refund is required of a premium or charge made for insurance if the insurance is terminated by performance of the insurer's obligation with respect to the insurance. For purposes of this provision, payment of a credit life insurance benefit does not constitute performance of the insurer's obligation with respect to credit disability insurance insuring the same debt.

(e) If a claim under credit disability coverage is in progress at the time of prepayment, the amount of refund may be determined as if the prepayment did not occur until the payment of benefits terminates. No refund is required to be paid during any period of disability for which credit disability benefits are payable.

(f) An insured debtor may terminate consumer credit insurance at any time by providing advance request made in accordance with the provisions of the individual policy or group certificate of insurance. The individual policy or group certificate may require that the request be in writing or that the debtor surrender the individual policy or group certificate, or both. The debtor's right to terminate coverage may also be subject to the terms of the credit transaction contract.

(3) Premiums may be assessed for credit insurance for the entire term of the related credit transaction, periodically over the scheduled terms of the credit transaction, periodically with respect to open-end credit, or for a shorter period than the scheduled maturity of the credit transaction.

Author: Reyn Norman, Associate Counsel

Ala. Admin. Code r. 482-1-117-.07

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.