Current through Register No. 12, March 21, 2024
(a) The premium
rates in (b) below shall be used to determine the single lives credit life
insurance earned premiums at the nominal rate level which are to be reported by
each insurer pursuant to
Ins
1201.11.
(b) Where the insured portion of an
indebtedness is repayable in equal monthly installments, the nominal premium
rate for credit life insurance shall be as set forth in (1) and (2) below while
subparagraphs (3) through (6) below shall apply to premium rates for other
types of benefits either alone or in combination with the type of benefits
applicable to (1) and (2) below:
(1) If
premiums are payable on a monthly outstanding balance basis, the nominal rate
shall be $.74 per month per $1000 of outstanding indebtedness;
(2) If premiums are payable on a single
premium basis, the nominal rates stated under subparagraph (1) above shall be
used to compute nominal single premium rates as the present value of the
coverage cost as if the decreasing coverage was provided on an outstanding
monthly balance basis throughout the term of coverage, as in the following
formulae:
a. Where the coverage is provided
on a gross indebtedness basis:
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b.
Where the coverage is provided on a truncated gross indebtedness basis:
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c.
Where the coverage is provided on a net indebtedness basis:
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d.
Where the coverage is provided on a truncated net indebtedness basis:
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e.
Where "SPn" and "t SPn" mean "single premium rate" per $100 of initial
indebtedness repayable in "n" equal monthly installments;
f. Where "OP" means The nominal monthly
outstanding "balance premium rate" per $1,000;
g. Where "n" means "original repayment
period", in months;
h. Where
"añ" means the present value at an interest
rate of i for n monthly payments of $1.00, first payable at
the end of the month;
i. Where "i"
means 1%, or the equivalent monthly compound interest rate associated with the
covered loan; and
j. Where "t"
means the coverage period in months;
(3) The nominal rate for level term life
insurance shall be $.74 per month per $1000 if premiums are payable on a
monthly outstanding balance basis;
(4) If level term life insurance premiums are
payable on a single premium basis, they shall be calculated as the present
value of the coverage cost as if the level coverage was provided on an
outstanding monthly basis throughout the term of coverage, as in the following
formula:
b.
Where "LSPn" means "single premium rate" per $100 of
initial indebtedness;
c. Where
"ãñ" means the present value at 1/2%
per month of n monthly payments of $1.00, first payable immediately;
d. Where "n" means the term of insurance, in
months; and
e. Where "OP" means
$.74 per month per $1000;
(5) A combination of the appropriate nominal
rate for level term and the appropriate nominal rate for decreasing term, with
equal decrements, shall be used if the coverage provided is a combination of
level term and decreasing term, with equal decrements; and
(6) If the benefits provided are other than
those described in subparagraphs (1) through (5) above, the nominal rate for
the benefits that are provided shall be the actuarial equivalent of the nominal
rates stated in or determined by the above subparagraphs, (1) through
(5).
(c) The premium
rates in paragraph (b) above shall apply to policies providing credit life
insurance to be issued with or without evidence of insurability, to be offered
to all debtors of a creditor.
(d)
The premium rates in paragraph (b) above shall contain:
(1) No exclusions other than suicide within
one year of the incurred indebtedness; and
(2) Either no age restrictions or age
restrictions that are no less favorable to insured debtors than age
restrictions making ineligible for coverage debtors 65 or over at the time
indebtedness is incurred or debtors having attained age 66 or over on the
maturity date of the indebtedness.
(e) An insurer may require that a debtor be
actively-at-work at the time the indebtedness is incurred in order to be
eligible for insurance.
(f) If
premiums are to be determined according to the age of the insured debtor or by
age brackets, the nominal rates for each age or age bracket shall be derived by
adjustments in the appropriate nominal rate stated in Ins 1201.08(b)(1) through
(6) above so that the nominal rates arrived at will be actuarially consistent
with the nominal rates set out in subsection (b)(1) through (6). All such rates
shall be filed with and shall be approved by the commissioner, if actuarially
consistent according to generally accepted actuarial principles, prior to
use.
(g) The premium rates for
joint lives credit life insurance earned premiums at the nominal rate level
shall be calculated by multiplying the single lives credit life insurance
earned premiums by a factor of 1.55.
#1900, eff 1-1-82; ss by #2441, eff 1-1-84; ss by #4287,
eff 7-1-87; ss by #5650, eff 7-1-93, EXPIRED 7-1-99
