Current through Register Vol. 49, No. 13, September 23, 2024
Subpart
1.
General standard.
Benefits provided under credit involuntary unemployment
insurance policies must be reasonable in relation to premiums charged. Premiums
will be considered reasonable if they conform to the prima facie rates shown in
part
2761.0700, or if a loss ratio of
at least 50 percent is contemplated to be achieved. Loss ratio means incurred
claims divided by earned premium.
Subp.
2.
Basic prima facie rates for closed-end credit are as
reflected in part 2761.0700.
The premiums shown in part
2761.0700, Schedule A, may be used
when credit involuntary unemployment insurance is issued in conjunction with
any loan which has a specified maturity date whether the premiums are financed
or otherwise collected on a monthly basis. To calculate the single premium rate
when premiums are financed in a closed-end loan, insurers must multiply the
rates shown in part
2761.0700, schedule A, by the term
of the coverage in months. The basic plan of insurance to which this prima
facie rate applies is as follows:
A.
Coverage is provided or offered, with or without underwriting, to all debtors
regardless of age or to all debtors not older than a specified age limit, which
shall not be less than age 65 at the time the insurance becomes effective or
age 66 at the scheduled maturity date of the transaction.
B. Exclusion from qualification for coverage:
(1) self-employed individuals, including
independent contractors;
(2)
workers in seasonal or temporary jobs, defined as jobs designed to last six
consecutive months or less;
(3)
individuals working for wages or salary for less than 30 hours a week;
or
(4) debtors who have been
notified either orally or in writing of any layoff or of employment termination
either by the effective date of coverage or within 90 days after the effective
date.
C. Coverage for
unemployment for any reason, except that coverage may be excluded for:
(1) voluntary forfeiture of salary, wage, or
other employment income;
(2)
resignation;
(3)
retirement;
(4) general
strike;
(5) illegal
walkout;
(6) war (declared or
undeclared), civil commotion, riot, insurrection, rebellion, or
revolution;
(7) separation from the
military;
(8) willful or criminal
misconduct or unlawful behavior;
(9) disability caused by accident, sickness,
disease, or pregnancy;
(10) nuclear
occurrence;
(11) natural disaster;
and
(12) a controlling stockholder
of the employer or any of the dependents of the controlling stockholder. A
person is a "controlling stockholder" if the person owns ten percent or more of
the outstanding voting stock of the employer.
D. Coverage becomes effective after a waiting
period of no more than 60 days after the initiation of the loan or credit
agreement, and benefits may be retroactive to the first day of unemployment or
after an elimination period of 30 days.
E. Benefits provided for various terms of
coverage shall not be less than the schedule below:
| TERM OF COVERAGE (MONTHS) |
CONSECUTIVE BENEFITS PAYABLE |
TOTAL BENEFITS PAYABLE |
| Under 12 |
3 |
3 |
| 12-23 |
3 |
6 |
| 24-35 |
4 |
12 |
| 36-47 |
6 |
12 |
| 48-60 |
6 |
12 |
| over 60* |
6 |
18 |
*includes open-end credit vehicles (e.g. credit cards)
F. The total amount of periodic
benefits payable shall not exceed the aggregate of the periodic scheduled
unpaid installments of the indebtedness at the time of the loss. The amount of
each periodic benefit shall not exceed the original indebtedness divided by the
number of periodic installments.
G.
If the period of unemployment for which benefits are to be paid is less than 30
days, 1/30th of the scheduled monthly payments for each day of a period within
the unemployment period must be paid to the creditor to reduce the debtor's
account.
H. In the event of
cancellation of the master policy, coverage as provided by the certificates
issued under that master policy shall remain in force until expiration, unless
sooner canceled according to other terms and conditions.
Subp. 3.
Basic prima facie rates for
open-end credit.
The basic prima facie rate for credit involuntary unemployment
insurance payable on a monthly outstanding balance basis in connection with
open-end credit transactions is reflected in part
2761.0700, Schedule B. The basic
plan of insurance to which this prima facie rate applies is as follows:
A. Coverage is provided or offered, with or
without underwriting to all debtors, except the plan or policy may have an age
restriction providing that no insurance will become effective on debtors on or
after the attainment of age 66 and that all insurance will terminate upon
attainment by the debtor of age 66.
B. Exclusion from qualification for coverage:
(1) self-employed individuals including
independent contractors;
(2)
workers in seasonal or temporary jobs, defined as jobs designed to last six
consecutive months or less;
(3)
individuals working for wages or salary for less than 30 hours a week;
and
(4) debtors who have been
notified either orally or in writing of any layoff or of employment termination
either by the effective date of coverage or within 90 days after the effective
date.
C. Coverage for
unemployment for any reason, except that coverage may be excluded for:
(1) voluntary forfeiture of salary, wage, or
other employment income;
(2)
resignation;
(3)
retirement;
(4) general
strike;
(5) illegal
walkout;
(6) war (declared or
undeclared), civil commotion, riot, insurrection, rebellion, or
revolution;
(7) separation from the
military;
(8) willful misconduct or
criminal misconduct or unlawful behavior;
(9) disability caused by accident, sickness,
disease, or pregnancy;
(10) nuclear
occurrence;
(11) natural disaster;
and
(12) a controlling stockholder
of the employer or any of the dependents of the controlling stockholder. A
person is a controlling stockholder if the person owns ten percent or more of
the outstanding voting stock of the employer.
D. Coverage becomes effective after a waiting
period of no more than 60 days after the initiation and use of each loan or
credit agreement, and benefits may be retroactive to the first day of
unemployment or after an elimination period of 30 days.
Subp. 4.
Reeligibility.
A credit involuntary unemployment insurance policy may impose
conditions under which an insured debtor becomes reeligible for credit
unemployment benefits after a period of receiving benefits. If reeligibility
conditions are required for full benefits for a subsequent period of
unemployment, the conditions may not be more stringent than the initial
eligibility conditions and in no event shall require that the insured be
actively at work for more than six consecutive months. If an insured debtor has
not satisfied the reeligibility requirement at the time of a subsequent
unemployment, the unemployment shall be considered a continuation of the prior
unemployment with no waiting period, and with a maximum benefit period equal to
the unused portion of the maximum benefit period for the prior
unemployment.
Subp. 5.
Joint coverage rates.
Joint coverage rates for credit involuntary unemployment
insurance shall be 185 percent of the specified single rate of coverage.
Subp. 6.
Presumption of
reasonableness.
Policy forms providing benefits as set forth in this part at
the prima facie rates then in effect will be conclusively presumed to be
reasonable in relation to the premium charged.
