Compilation of Rules and Regulations of the State of Georgia
Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER
Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE
Subject 120-2-107 - INSURANCE WRITTEN IN CONNECTION WITH LOANS UNDER THE GEORGIA INSTALLMENT LOAN ACT
Rule 120-2-107-.03 - Credit Life Insurance

(a) Level term life insurance will pay the first beneficiary at the death of the insured the amount of the indebtedness, not exceeding the amount of insurance stated in the policy, and pay the second beneficiary the amount stipulated in excess of the indebtedness; or if there be no indebtedness, the full face amount of the policy shall be paid to the second beneficiary.

(b) Reducing term life insurance will pay the first beneficiary the amount of indebtedness, if any, owing by the insured to the first beneficiary at the time of the death of the insured.

(a) Credit level term life insurance or group credit level term life insurance may be written as security on all loans made under the provisions of the Georgia Installment Loan Act. Insurance coverage shall not exceed the face amount of the contract. The premium shall not exceed $.84 per annum per $100.00 of the face amount of the loan unless otherwise authorized by law and applicable rules and regulations.

(b) Credit decreasing term life insurance may be written on all loans made under the provisions of the Act. Insurance coverage shall not exceed the face amount of the contract. The premium shall not exceed $.45 per annum per $100.00 of the face amount of the loan unless otherwise authorized by law and applicable rules and regulations. For premiums not based on initial insured indebtedness, the premium shall not exceed a monthly rate of $.70 per $1,000.00 of outstanding unpaid insured indebtedness.

(c) Single premiums for credit life insurance covering joint lives on either of the bases in subparagraphs (2)(a) or (2)(b) of this rule shall not exceed 150 percent of the appropriate single life rate specified in subparagraphs (2)(a) or (2)(b) of this rule.

(d) Single premiums for credit decreasing term life insurance covering joint lives on either of the bases in paragraph (c) of this rule shall not exceed 150 percent of the appropriate single life rate specified in paragraph (c) of this rule.

(a) If through prepayment the indebtedness is discharged prior to the scheduled maturity date, the insured in all instances (except group credit reducing term life, which must be canceled) shall be given the option either to cancel or to retain such insurance. The option to cancel or to retain shall be set forth in writing either as a part of the policy or certificate or by separate written statement furnished to the debtor.

(b) In the event of renewal or refinancing accounts where credit life insurance is written on the new loan, any unexpired credit life insurance which was written in connection with the previous loan or loans, shall be concurrently canceled and proper credit given the borrower by refunding to him the unearned portion of the premium on the former policy or policies.

(a) All unearned premiums on credit life insurance shall be made according to the Rule of 78's without regard to a minimum refund provision.

(b) Refunds will be made in all instances of insurance cancellations due to prepayments, renewals, and refinancing with the exception of a loan prepaid in full by credit life insurance proceeds; in this event life insurance premiums shall be considered earned unless otherwise provided in the insurance contract.

(a) Where a credit life insurance policy or certificate is issued to cover two lives jointly, the amount of credit life insurance shall be made payable upon the death of the first to die during the term of the policy, and the policy or certificate will then terminate. The phrase "two lives" as used in the preceding sentence means only spouses or business partners and such persons must be jointly and severally liable for the repayment of the single indebtedness and be joint signers of the instrument of indebtedness. Endorsers and guarantors are not eligible for such credit insurance coverage covering joint lives. Joint life coverage shall not be written covering more than two lives. Jointly indebted spouses shall not be covered separately at single life rates.

(b) No disability benefit provisions may be included in such a joint credit life policy, except that disability benefits may be provided on one of the lives insured who is specifically identified by name if the policy provisions clearly indicate that only such person is covered for disability benefits.

(c) If a credit life policy containing a suicide exclusion is issued on joint lives, the policy must be specific regarding termination of the policy, or continuation of the policy on the life of the survivor, and appropriate refunds to be made in the event suicide does occur.

(a) As used in paragraph (3) of O.C.G.A. Section 7-3-11, the term "principal party" refers to the person or persons from whom repayment of the loan is expected because such person:

(b) A spouse is not principal party by virtue only of the status of spouse without meeting the criteria of subparagraph (a) of this paragraph.

(c) The burden of proving the status of a person as a principal party for purposes of requiring insurance shall be upon the licensee. Such information shall be obtained in writing by the licensee and shall become a part of the loan file.