Current through Register Vol. 49, No. 13, September 23, 2024
Subpart
1.
Initial prima facie rates.
Subject to the conditions and requirements in subpart
2 and part
2760.0090, the initial prima facie
rates in this subpart meet the requirements of part
2760.0040 and are the maximum
rates to be used without further proof of reasonableness, until the effective
date of any adjustment under part
2760.0080.
A. If the premium is charged on a monthly
outstanding balance (MOB) basis, the initial prima facie rate is $0.615 per
month per $1,000 of outstanding insured debt on single life.
B. If the premium is charged on a single
premium basis, the rate shall be computed according to the following formula or
according to a formula approved by the commissioner which produces rates
actuarially consistent with the following formula:
|
|
|
n
|
|
|
OP
|
x |
[summation]
|
I
t
|
| SP = |
10 |
|
t = 1 |
I
0
|
| where: |
OP = Prima facie life rate per $1,000 per month |
|
n = Term of insurance coverage (months) |
|
It = Scheduled amount of insurance
for month t |
|
SP = Single premium prima facie rate per $100 initial
amount of insured loan amount |
|
Note: It includes any additional
monthly payments covered in the benefit but not more than 1 for n <= 63
months and 2 for n > 63 months |
For purposes of calculating the single premium credit life
rate, the initial value of OP is $0.615.
C. If the life coverage is sold on a joint
basis involving two debtors, the rate for the joint coverage shall be 167
percent of the applicable single rate.
D. If the insurer provides benefits more
restrictive than specified in subpart
2, the insurer must file and
use rates that are actuarially equivalent and must receive approval from the
commissioner as meeting the requirements of part
2760.0040 before use. If the
insurer provides benefits less restrictive than specified in subpart
2, the insurer shall either
use the rates specified or rates that are actuarially equivalent, in which case
the insurer must receive approval from the commissioner as meeting the
requirements of part
2760.0040 before use.
Subp. 2.
Application to
certain contracts.
The premium rates in subpart
1 shall apply to contracts
providing credit life insurance that are offered to all eligible debtors
electing to purchase coverage within 30 days of the date the debtor becomes
eligible and that conform to the following provisions.
A. Coverage for death by whatever means
caused, unless coverage excludes death resulting from:
(1) war or any act of war;
(2) suicide within six months after the
effective date of the coverage or later advance; or
(3) subject to provisions of item B, a
preexisting condition or conditions.
B. For the purpose of item A, subitem (3), no
preexisting condition exclusion shall apply unless death is caused by or
substantially contributed to by the preexisting condition and unless death
occurs within six months following the effective date of coverage or later
advance.
C. The insurer has the
option to include in lieu of a preexisting condition exclusion on insurance
written in connection with open-ended credit account, a provision to limit the
amount of insurance payable on death due to natural causes to the balance as it
existed six months before the date of death if there has been one or more
increases in the outstanding balance during the six-month period and if
evidence of individual insurability has not been required in the six-month
period before the date of death. This provision applies only if and to the
extent that the amount of coverage to which it would otherwise apply in the
absence of this limitation exceeds $1,000.
D. An age restriction providing that no
insurance will become effective on debtors on or after the attainment of age 70
and that all insurance will terminate upon attainment by the debtor of age
70.
E. The insurer does not require
evidence of individual insurability if the initial amount financed or open-end
credit account limit is $15,000 or less and the applicant elects to purchase
coverage within 30 days of the effective date of the indebtedness.
Subp. 3.
Other reasonable
rates.
A. If the insurer uses a form
that does not exclude preexisting conditions, a rate equal to 105 percent of
the prima facie rate shall be considered reasonable.
B. If the insurer, its agent, or the
application form for credit life insurance requests or requires that the debtor
provide evidence of individual insurability and the initial amount financed or
open-end credit account limit available is above $15,000 or the applicant
elects to purchase coverage more than 30 days after the effective date of the
indebtedness, then the premium rates considered reasonable will be the prima
facie rates in subpart
1. For policies insuring
open-end lines of credit, the insurer may require evidence of individual
insurability for advances which increase the outstanding debt above
$15,000.
Subp. 4.
Insurance application forms.
Insurers' use of the same application forms for credit life and
credit accident and health insurance is permitted whether or not the
underwriting questions are asked pursuant to subpart
3.
Statutory Authority: MS s
62B.12
