California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 2 - Policy Forms and Other Documents
Article 6.8 - Credit Life and Credit Disability Insurance: Premium Rates
Section 2248.31 - Definitions
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
All 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:
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) |
| _____________________________________________________________ | |
* See subparagraph (4).
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 |
| ______________________________________________________________________ | |
| = | Earned Premium (monthly basis) |
*See subparagraph (5).
(g) "Incurred claims" are computed as follows:
| Claims paid during the experience period | |
| + | Claim reserve at the end of the experience period |
| - | Claim reserve at the end of the preceding experience period |
| ________________________________________________ | |
| = | 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. |
| "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.
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.
