Okla. Admin. Code § 365:10-5-64

Current through Vol. 42, No. 8, January 2, 2025

Section 365:10-5-64 - Presumptively acceptable relationship of credit life insurance benefits to premiums

(a)Purpose. The purpose of this Part is to, with respect to credit life insurance:

(1) Establish single life coverages per specified monthly outstanding balance indebtedness;

(2) Establish joint credit insurance;

(3) Establish the formula for premium charge to debtors for outstanding balance insurance;

(4) Provide for premiums or obligations paid in other than equal monthly installments;

(5) Establish requirements for presumed reasonableness of life insurance benefits in relation to premiums; and

(6) Provide for premiums based on age.

(b)Presumptively reasonable life rates. The Commissioner has determined that the benefits of credit life insurance are reasonable in relation to the premiums charged, if the premium rate schedule for death benefits as filed does not exceed an amount equal, or actuarially equivalent, to the following maximum rates:

(1) Coverage on a single life provided on the outstanding indebtedness basis of 1.05 per month per $1,000.00 of outstanding balance of insurance debtedness.

(2) Coverage on a single life provided by a individual or group policy on other than an outstanding indebtedness basis:

(A) .68 per year of coverage per $100.00 of initial insured indebtedness for all credit transactions when the insured indebtedness is repayable in substantially equal monthly installments during the term of coverage and,

(B) 1.26 per year of coverage per $100.00 of level life insurance where the amount of insured indebtedness remains level during the term of coverage and is repayable in a single sum at the end of the term.

(3) Coverage on joint lives provided on the outstanding indebtedness basis of 1.58 per month per $1,000.00 of outstanding balance of insured indebtedness.

(4) Coverage on joint lives provided by an individual or group policy on other than an outstanding indebtedness basis:

(A) 1.02 per year of coverage per $100.00 of initial insured indebtedness for all credit transactions when the insured indebtedness is repayable in substantially equal monthly installments during the term of coverage and,

(B) 1.89 per year of coverage per $100.00 of level term insurance where the amount of insured indebtedness remains level during the term of coverage and is repayable in a single sum at the end of the term.

(c)Joint credit life insurance.

(1) Where, with respect to a single indebtedness, coverage is provided on two (2) lives, the presumptive credit life insurance premium rates shall not exceed either those set forth in 365:10-5-64(3) or (4), as applicable. The phrase "two (2) lives" as used in the preceding sentence means only spouses, business partners, comakers, guarantors and endorsers, and such persons must be jointly and severally liable for repayment of a single indebtedness and must be joint signers of the instrument of indebtedness. Joint life coverage shall not be written covering more than two (2) lives. Jointly indebted persons shall not be covered separately at single life rates.

(2) Joint life rates may not be charged for single life coverage.

(d)Premiums for obligations paid in other than equal monthly installments. Premiums and premium rates for insurance covering obligations payable in other than substantially equal monthly installments during a period of coverage shall be determined in a manner resulting in a rate not exceeding the actuarially equivalent of the foregoing rates.

(e)Conditions of life insurance benefits. The foregoing rates for life insurance shall be presumed reasonable if the following requirements are met:

(1) That the credit life insurance contract may require submission of the debtor's written and signed evidence of the debtor's insurability or that the debtor may be employed at the time of application for insurance, or both, on a form filed and approved by the Commissioner, and that such contract contains no conditions for validity of insurance more restrictive than contestability based on material misrepresentation and no exclusions other than for suicide. In life policies, such exclusions shall not remain effective after termination of the contestable period of the policy or certificate. Employment or health may not be a condition precedent to coverage unless the insurer required the insured to answer specific health questions regarding specific medical conditions or symptoms for which diagnosis, care or treatment was received within one (1) year preceding the date of application. Health questions shall not be unreasonable in number and shall not require medical knowledge or information which an ordinarily prudent person would not be expected to possess. All health questions shall appear in not less than ten (10) point type.

(2) That life insurance coverage is provided or offered to all debtors regardless of age; or to all debtors not older than the applicable age limit. The applicable age limit shall not be less than the attained age of seventy (70) years if such limit applies to the age when the insurance attached, or not less than the attained age of seventy-one (71) years if such limit applies to the age on the scheduled maturity date of the debt. No limitation of insurance amount or term based on any attained age of less than seventy (70) years shall be used, and

(3) That debtors shall not be required to purchase any package of benefits which combines life or accident and health with property or casualty insurance.

(f)Premiums based on age. If the premiums are determined according to the age of the insured debtor or by age brackets, appropriate adjustments in the rate and premium may be made according to age if such adjustments are actuarially consistent with the foregoing rates when applied, regardless of actual age at issue, and if such adjustments produce an aggregate premium not substantially greater than that produced by the foregoing rates, and such rates and actuarially consistent computations are filed and approved by the Commissioner.

(g)Standard for additional benefits. If a contract of insurance includes other lawful benefit or benefits for which standards of reasonableness of benefits in relation to premium are not elsewhere in this Part determined or described, any premium charged therefore in excess of the rates set forth in this Part shall be shown, to the satisfaction of the Commissioner, to be based upon reasonably anticipated experience, and to be reasonable in relation to the additional benefit provided, and shall be in accordance with the basic loss ratio set forth in this Part.

Okla. Admin. Code § 365:10-5-64

Amended at 10 Ok Reg 3049, eff 10-1-93; Amended at 10 Ok Reg 4235, eff 10-1-93 (emergency); Amended at 11 Ok Reg 1847, eff 5-15-94; Amended at 13 Ok Reg 2669, eff 7-1-96; Amended at 14 Ok Reg 2650, eff 7-1-97