Section 532.3 - Policies issued to creditorsA policy issued to a creditor to insure debtors of the creditor shall be subject to the following requirements:
(1) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor whose indebtedness is repayable in instalments, or all of any class or classes thereof determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness. The policy may provide that the term "debtors" shall include the debtors of one or more subsidiary corporations, and the debtors of one or more affiliated corporations, proprietors or partnerships if the business of the policyholder and of such affiliated corporations, proprietors or partnerships is under common control through stock ownership, contract, or otherwise.(2) The premium for the policy shall be paid by the policyholder, either from the creditor's funds, or from charges collected from the insured debtors, or from both. A policy on which no part of the premium is to be derived from the collection of such identifiable charges must insure all eligible debtors, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.(4) The amount of insurance on the life of any debtor shall at no time exceed the amount owed by him which is repayable in installments to the creditor, or one hundred thousand dollars ($100,000), whichever is less.(5) The insurance shall be payable to the policyholder. Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of such payment.1949, May 11, P.L. 1210, § 3. Amended 1957, July 5, P.L. 478, § 1; 1970, March 23, P.L. 206, No. 83, § 1; 1978, Nov. 26, P.L. 1240, No. 293, § 1, imd. effective; 1991, July 11, P.L. 86, No. 19, § 1, effective in 60 days; 1994, Feb. 3, P.L. 1, No. 1, § 3, effective in 90 days.