Current through Register No. 12, March 21, 2024
(a) The
premium rates in (b) below shall be used to determine the single lives credit
accident and health insurance earned premiums at the nominal rate level which
are to be reported by each insurer pursuant to
Ins
1201.11.
(b) The nominal credit accident and health
insurance premium rates for the insured portion of an indebtedness repayable in
equal installments shall be as set forth in (1) and (2) below for the benefits
described in paragraph (e) below:
(1) If
premiums are payable on a single premium basis, the nominal premium rates shall
be calculated as follows:
a. Where the benefit
period is coterminous with the remaining loan term, the nominal rates shall be
calculated as the present value of the claim costs plus an allowance for
administrative costs as in the following formula:
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b. For
critical period coverage, the nominal premium rates shall be calculated by
multiplying the single premium calculated in a. above by the ratio of single
claim costs for the critical period and the term of the loan as indicated by
the following formula:
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c.
Where "SPn"and
"CPSPn" mean the nominal single
premium for $100 of initial insured indebtedness;
d. Where
"SSCen" and
"SSCeCP" mean the single
claim cost per $100 initial insured indebtedness from the two-table "Credit
Accident and Health Morbidity Study, 1968 NAIC Proceedings, Volume II, p. 638"
and "1970 NAIC Proceedings, Volume I, p. 332", incorporated herein, for
retroactive or non-retroactive coverage as the case may be, with an elimination
period of "e" and a loan term of "n";
e. Where "n" means the term of the
indebtedness in months; and
f.
Where "e" means the elimination period, either 14 or 30 days; and
(2) If premiums are paid on the
basis of a premium rate per month per $1000 of outstanding indebtedness, the
nominal monthly outstanding balance premium rate shall be calculated as the
amount that would amortize the single premium rate over the term of coverage,
as in the following formula:
b. Where
"SPn"means the nominal single premium per $100 of
initial insured indebtedness repayable in n equal monthly
installments;
c. Where
"OPn" means the nominal monthly outstanding balance
premium per $1000; and
d. Where "n"
means the original repayment period in months.
(c) If the insurance provided is a different
form of coverage than the forms of coverage for which appropriate nominal rates
are specified in paragraph (a) above, other methods of determining nominal
premium rates for such different forms of credit accident and health insurance
may be used provided the resulting rates shall be actuarially consistent in the
aggregate with the nominal premium rates determined by (a)(1) above.
(d) The nominal premium rates determined by
paragraphs (a) and (b) shall apply to policies providing credit accident and
health insurance that is offered to all debtors, which is to be issued with or
without evidence of insurability.
(e) The nominal premium rate referenced in
(c) above shall contain:
(1) A definition of
disability no more restrictive during the first year of disability than
requiring that the insured debtor be unable to perform the substantial duties
of his or her occupation, and, thereafter, the substantial duties of any
occupation for which the insured is reasonably fitted by education, training,
or experience;
(2) No provisions
excluding or denying a claim for disability resulting from pre-existing
conditions except for those conditions manifesting themselves to the insured
debtor by requiring medical treatment or diagnosis within 6 months preceding
the effective date of the debtor's coverage and which caused loss within 6
months following the effective date of coverage;
(3) No other provision which excludes or
restricts liability in the event of disability caused in a specified manner
except that it may contain provisions excluding or restricting coverage in the
event of pregnancy, intentionally self-inflicted injuries, and flight in
non-scheduled aircraft;
(4) No age
restrictions or only age restrictions that are no less favorable to the insured
debtors than age restrictions making ineligible for coverage debtors 65 or over
at the time the indebtedness is incurred or debtors who will have attained age
66 or over on the maturity date of the indebtedness;
(5) A daily benefit equal in amount to 1/30
of the scheduled monthly payments on the indebtedness; and
(6) No actively-at-work test that requires
that the debtor be employed more than 30 hours per week.
(f) Subparagraph (e)(1) shall not apply to
lump sum disability coverage.
(g)
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) through (d) above so that
the nominal rates arrived at shall be actuarially consistent with the nominal
rates set out in paragraphs (b) or (c) above.
(h) All such rates in (g) above shall be
filed with and approved by the commissioner, if actuarially consistent, prior
to use.
(i) The premium rates for
joint lives credit accident and health insurance earned premiums at the nominal
rate level shall be calculated by multiplying the single lives credit accident
and health insurance premiums by a factor of 1.64.
(j) Insurers may use a rate for the nominal
monthly outstanding balance premium rate that is independent of the term of the
loan.
(k) In calculating a rate
that is independent of the loan term, the insurer shall:
(1) Calculate the rate as the weighted
average of the prescribed nominal monthly outstanding balance premium
rates;
(2) Use the outstanding
principal amounts as weights; and
(3) Demonstrate that this composite term
premium rate is revenue neutral compared to the term specific rates otherwise
prescribed.
(l) Insurers
may use an alternative rate development methodology for calculating nominal
monthly outstanding balance premium rates that are independent of the term of
the loan, with the commissioner's approval, provided that such rates are
actuarially equivalent to the actual premium rates produced by
Ins
1201.10.
#1900, eff 1-1-82; ss by #2441, eff 1-1-84; amd by #3196,
eff 2-5-86; ss by #4287, eff 7-1-87; ss by #5650, eff 7-1-93, EXPIRED
7-1-99
New. #7146, eff 4-1-00; amd by
#7789, eff 11-1-02; ss by #9611, eff
1-4-10
