Section 2248.31 - DefinitionsAll words or phrases not defined in this Section shall have the same meaning in these regulations as they have in Article 5.9 of Chapter 1 of Part 2 of Division 1 of the Insurance Code, starting with § 779.1. As used in this Article:
(a) "Actuarially equivalent" means having a pattern of rates and benefits or of premium refunds and remaining coverage which can be demonstrated to be equivalent to another pattern of rates and benefits or of premium refunds and remaining coverage by the application of contingency, interest and discount factors or otherwise.(b) "Class A Decreasing Life" provides a life insurance benefit which decreases in accordance with the scheduled decline in Closed End debt principal except that it covers any delinquent payments, pursuant to Financial Code §§ 18291 and 22314(e). This coverage is provided by standard policy forms ID numbers 6 through 9 in Article 6.9 of this Subchapter.(c) A "Closed End" plan of indebtedness provides for repayment, in substantially equal payments, of a principal amount for a term and at an interest rate, all of which are fixed at the commencement of the term of the debt.(d) "Credit Card" is an Open End plan of indebtedness based upon the use of a "credit card", as defined in Civil Code § 1747.02(a).(e) "Credit Union Open End" is an open end plan of indebtedness extended by a credit union which provides for periodic payments, often in substantially equal amounts, which may be adjusted from time to time if the insured increases the outstanding debt or repays the loan faster than required. Coverage of this plan of indebtedness is provided by standard policy forms ID numbers 18 through 22 in Article 6.9 of this Subchapter.(f) "Earned premium" is computed as follows: (1) Where premiums are collected on a single premium basis for the entire term of coverage: Single premiums which became due the insurer during the experience period
| - | The unearned premium reserve* at the end of the experience period |
| + | The unearned premium reserve* at the end of the previous experience period |
| - | Premium refunds or adjustments resulting from termination of coverage |
| = | Earned Premium (single premium basis) |
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* See subparagraph (4).
(2) Where premiums are payable monthly during the term of coverage: Monthly premiums paid the insurer during the experience period
| + | Monthly premiums due the insurer but unpaid at the end of the experience period |
| - | Monthly premiums due the insurer but unpaid at the end of the previous experience period |
| - | Unearned premium reserve* at the end of the experience period |
| + | Unearned premium reserve* at the end of the previous experience period |
| - | Premium refunds or adjustments resulting from termination of coverage |
| ______________________________________________________________________ |
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| = | Earned Premium (monthly basis) |
*See subparagraph (5).
(3) Dividends, experience refunds or any other reductions of premium after issuance of coverage shall not be subtracted from earned premium nor included in benefits.(4) The unearned premium reserve for single premium life plans equals the single premium for the amount and term of the remaining indebtedness. The unearned premium reserve for single premium disability plans is the single premium for the sum of the remaining loan payments and the remaining term of the loan.(5) The unearned premium reserves for monthly premium life plans and disability plans equal the unearned portions of the gross premiums in force. This depends on the distribution of due dates through the month. The calculation shall be made consistently from month to month. For example, the unearned premium reserve for monthly business can only be zero if all due dates are at the first of the month.(g) "Incurred claims" are computed as follows: | Claims paid during the experience period |
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| + | Claim reserve at the end of the experience period |
| |
| - | Claim reserve at the end of the preceding experience period |
| ________________________________________________ |
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| = | Incurred Claims |
| Where: | "Claims" means benefits payable during the experience period because of death or disability without additions of any kind. A disability claim is deemed incurred on the date when disability commenced. |
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| "Claim reserve" is the sum of the reserves for claim liability on disabled lives, claims incurred but not reported and claims due but unpaid. The Commissioner may disallow that part of any claim reserve which is unsupported by provable data. |
(h) "Joint Disability" insures two persons jointly liable for an indebtedness on any plan. The full monthly benefit becomes payable on the disability of the first insured to become disabled.(i) "Joint Life" insures two persons jointly liable for the indebtedness on any of the above plans. The full life insurance benefit is paid and coverage terminates on the death of the first insured. This coverage is represented by standard policy form text blocks PC 3 and PD 1 of § 2249.12 of this Chapter.(j) "Level Life" provides a constant fixed benefit over the term of coverage. This coverage is provided by standard policy forms ID numbers 16 and 17 in Article 6.9 of this Subchapter.(k) "Line of Credit" is any Open End plan of indebtedness that is not a "Credit Union Open End" plan or a "Credit Card" plan. It includes "lines of credit", variable interest rate loans and revolving accounts other than "credit cards".(l) An "Open End" plan of indebtedness is one in which one or more of the following are variable at the creditor's or the debtor's option - the principal amount, the term of the indebtedness, the number of payments, the amount of each payment or the interest rate.(m) "Scheduled Decreasing Life" (sometimes called "net balance life") provides a life insurance benefit which decreases in accordance with the scheduled decline in Closed End debt principal. This coverage is provided by standard policy forms ID numbers 11 through 14 and 25 through 28 in Article 6.9 of this Subchapter.(n) "Premium" means the premium amount charged or the insurance charge made for the insurance actually provided.(o) "Prima facie rates" means the maximum rates which reasonably can be expected to provide the presumptive loss ratio referred to in Ins. C. § 779.36 and the relationship of benefits to premiums required by § 779.9.(p) "Rate" means the amount charged per unit of insurance coverage.Cal. Code Regs. Tit. 10, § 2248.31
1. New section filed 4-14-94; operative 5-16-94. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 94, No. 15).
2. Amendment of section and NOTE filed 10-2-2001; operative 10-1-2001. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2001, No. 40).
3. Editorial correction of first paragraph and subsections (b), (d), (i) and (l) (Register 2001, No. 49).
4. Amendment of subsection (f)(2) filed 1-9-2002; operative 1-9-2002. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2002,, No. 2). Note: Authority cited: Sections 779.21 and 779.36, Insurance Code. Reference: Sections 779.2, 779.4, 779.9, 779.30(f), 779.36, Insurance Code; Sections 18290, 18291, 22314, 22315 and 22455, Financial Code; and Section 1747.02(a), Civil Code.
1. New section filed 4-14-94; operative 5-16-94. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 94, No. 15).
2. Amendment of section and Note filed 10-2-2001; operative 10-1-2001. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2001, No. 40).
3. Editorial correction of first paragraph and subsections (b), (d), (i) and ( l) (Register 2001, No. 49).
4. Amendment of subsection (f)(2) filed 1-9-2002; operative 1-9-2002. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2002,, No. 2).