Section Ins 304.01 - Premium Financing Requirements(a) If a note is taken to finance less than the full first year premium, the balance shall be paid by the applicant at the time the application is taken.(b) If a note is taken to finance all or part of the first year's premium, said note may be sold or otherwise negotiated or transferred by the payee with recourse only.(c) One who becomes a payee of the note, whether that is the premium finance company, or any affiliate thereof, note purchaser, or any assignee of the note, shall notify the notemaker, the insured, and all co-makers of the note about the purchase or transfer of the note. In providing such notification, the life insurance policy, which is used as collateral for the note, shall be identified by policy number, named insured, and life insurance company.(d) The giving of a promissory note in connection with the first premium shall be set out in the application over the applicant's signature, showing the amount of the note, the true annual rate of interest, and the amount of any downpayment made to the agent at the time of sale and, if applicable, the fact that the note becomes due and payable in full upon any default in premium payment.(e) Any note may contain an acceleration clause to become operable not less than 31 days after default in the payment of any renewal premium. The obligation evidenced by a promissory note may be satisfied in advance of the maturity date without penalty. Where the applicant is an undergraduate college student, the maturity date of any promissory note payable in one lump sum at maturity, or the maturity date of any installment type note which provides for a balloon payment, shall not be less than 90 days after the anticipated graduation date from college of the applicant.(f) Any downpayment shall be paid by the applicant, and any payment or reimbursement to or for the benefit of the applicant in connection with the sale, directly or indirectly, shall be presumed to be a rebate or an improper inducement.(g) Any premium financing arrangement shall be fully set forth and described in the policy or policy rider, and a copy of any promissory note executed by the insured and any assignment thereof shall be attached to the policy.(h) Upon delivery of the policy to the insured, a receipt or acceptance form shall be executed which recites that: (1) The policy has been issued as represented; and(2) The insured acknowledges and understands the obligation of the premium financing arrangement and the financial indebtedness that they have incurred.(i) The premium finance company shall request the insured to sign and return the policy receipt or acceptance form to the company within 14 days of receipt by the insured. Such receipt or acceptance form outlined in Ins 304.01(h) shall be identified by number with the corresponding life insurance policy number and kept with other policy records of the insured in the company's principal place of business.(j) The blank receipts or acceptance forms referred to in Ins 304.01(h) shall not be made available to field representatives, agents, or producers but shall be furnished by the company only in transmittal of the policy to the writing agent.(k) Until the executed policy receipt or acceptance form has been received and filed with the company, no promissory note executed by the insured shall be sold or otherwise transferred or assigned, and no commission on such sale shall be paid to any agent or producer.(l) The maximum amount of any such premium financing arrangement which may be entered into in connection with the purchase of the policy shall be in accordance with reasonable and sound underwriting practices as determined by the company.(m) Producers and companies shall comply with Ins 302 as to any partial or total replacement of an existing life policy that is associated with a premium finance arrangement.(n) Producers of the company who are licensed by this state to represent the company as licensed life producers shall not represent, refer to, or hold themselves out to the public under any special title or as representatives of any special policy or company division unless otherwise identified as a licensed producer of the company for which they hold a license.(o) In the case of a request being made by an insured expressing a desire to cancel such a policy and premium financing arrangement, the company, its agents, and its producers shall cooperate with the insured to work towards a satisfactory resolution of the matter. If such matter cannot be resolved in a timely manner, the premium finance company shall provide a notice to the insured that the insured may contact the consumer services division of the New Hampshire insurance department for assistance. Consumer services may be reached by phone at (800) 852-3416 or by email at consumerservices@ins.nh.gov.(p) If, at the time the receipt or acceptance form is presented with the policy to the applicant for signature, the applicant decides not to proceed with the premium finance arrangement, the policy shall be returned to the company with the applicant's signed request for release. The policy and note shall then be cancelled and the applicant released from any liability relative to the application and a refund made of any downpayment.(q) If it is determined that the company or producer has violated this part, or if it is determined that there has been a material misrepresentation of the contract, then the policy shall be returned to the company with a signed request for release. The policy and note shall then be cancelled and the applicant released from any liability and refund made of any downpayment.(r) Any cash value of the life insurance policy shown at the time of presentation of the premium finance arrangement shall be based upon the face amount of the policy being offered. For example, if a $10,000 policy is being sold, the value for this $10,000 policy, and not the values for a $50,000 or $75,000 policy, shall be given. If a sales presentation was made for an amount of insurance greater than what the applicant decided to purchase, an appropriate summary shall be given to the applicant for the correct cash value of the policy sold not later than the time that the applicant signs the application for the note.(s) Companies shall notify their agents and producers of the requirements set forth in this part.N.H. Admin. Code § Ins 304.01
Amended by Volume XXXVII Number 41, Filed October 12, 2017, Proposed by #12399, Effective 9/30/2017, Expires 9/30/2027.