New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter VII - Credit And Creditor Insurance
Part 185 - Credit Life Insurance And Credit Accident And Health Insurance
Section 185.13 - Open-end loans and charge plans
Universal Citation: 11 NY Comp Codes Rules and Regs ยง 185.13
Current through Register Vol. 46, No. 12, March 20, 2024
(a) These rules, and the provisions of all other sections of this Part not in conflict with the following, shall apply to credit insurance on open-end loans or charge plans:
(1) If a premium or charge for the insurance
is to be made to the debtor by the creditor, insurance may be issued on a
debtor only if he elects in writing to become insured and agrees to pay the
premium or charge for the insurance. The debtor shall be given the right to
discontinue the insurance at any time by advance notice to the creditor. If the
insurance benefits are reduced, or if the premium rate for the insurance is
increased, the creditor shall give the insured debtors advance notice of the
change and remind them of their right to discontinue the insurance.
(2) The disclosure requirements in section
185.5(a)
or (d) of this Part for policies,
certificates, or notices of proposed insurance shall apply only when the credit
insurance on the open-end loan or charge plan is first issued. A new policy or
certificate of insurance need not be issued each time the insured debtor incurs
indebtedness on the account.
(3) If
the insured person has incurred no indebtedness or if at any time he has repaid
all outstanding indebtedness, the amount of his insurance will be zero. Subject
to any maximums, the amount of credit life insurance on an insured debtor shall
be the unpaid indebtedness balance owing by him on the date of his death,
including any amount received by him during his lifetime and recorded after his
death, including any accrued interest. The amount of a periodic credit
disability insurance benefit shall not exceed the greater of the amount of the
minimum payment which the debtor is required to make on his loan or charge plan
on the date his disability commenced, or a specified percentage, not to exceed
six percent, of the debtor's unpaid indebtedness balance on the date his
disability commenced. For credit disability policies with a maximum amount of
insurance of $2,500 or less, the benefit may be written for a lump sum payment
with a waiting period of 90 days and the amount payable equal to the amount
outstanding on the day of disability.
(4) A debtor's insurance may be terminated on
the earliest of any of the following dates, but such termination of insurance
shall not prejudice a claim existing on date of termination:
(i) on the date requested by the debtor or
the date he fails to pay any required premium or charge on insurance;
(ii) on the premium billing date coinciding
with or next following the date the debtor attains a stated age, which will not
be less than age 66;
(iii) on the
date the open-end loan or charge plan is terminated;
(iv) on the date the debtor is in default, as
defined by the creditor's rules;
(v) subject to the notice requirement of
section
185.5(h)
of this Part, on the date the group policy is terminated; or
(vi) on the date the policyholder terminates
coverage on all revolving accounts of the same class as that held by the
debtor, subject to a minimum 31 day notice to all debtors.
(5) Credit disability insurance may include
the preexisting exclusion specified in section
185.5(e)
of this Part. This provision shall apply separately to each new indebtedness
incurred by the debtor, and shall not be reapplied to the total indebtedness
balance each time a new indebtedness is incurred.
(6) The disability insurance shall exclude
from benefits, indebtedness incurred by the debtor while he was disabled. An
identifiable charge shall not be charged on any new indebtedness incurred by
the debtor while he is receiving disability benefits, unless the forms clearly
indicate that the debtor may request the coverage to terminate and that such
termination will in no way affect a claim incurred prior to the termination.
Any identifiable charges paid by the insured after the date of such termination
are subject to the refund requirements of section
185.8
of the Part.
(7) Total benefits for
any period of disability may be limited to any or all of the following:
(i) an amount stated in the policy;
(ii) an amount described in the
policy;
(iii) a specified number of
payments; or
(iv) until a specified
age.
If subparagraph (iv) of this paragraph is used then such age may not be less than 66 and benefits may not terminate because of the attainment of the specified age before the earlier of either when 12 months of benefits have been paid or when the benefits would have stopped if the termination due to age did not appear.
(8) The insurance may include a reinstatement
provision for a debtor who has been paid the full benefits of the insurance. In
the event the debtor has been paid the full benefits, the insurer shall so
notify the insured, describe the circumstances under which he would be again
eligible for benefits, describe the amount of such benefits if less than full
benefits are available and give the insured 90 days to cancel coverage with a
full refund of any identifiable charges made during the 90 day
period.
(9) Insurance on a debtor
for an open-end loan or charge plan, may only be provided on a periodic
outstanding balance premium basis. The periodic charge may be applied to
either:
(i) the average daily indebtedness
balance in the debtor's account during the billing period;
(ii) the indebtedness balance in the debtor's
account on the billing date; or
(iii) by any other method as the
superintendent may approve.
The method used shall be set forth in the group policy and certificate.
(10) The charge for insurance may be added to
the debtor's indebtedness balance periodically and shall be shown separately
from any other charge. If the charges for credit life, credit accident and
health and credit unemployment insurance are not shown separately, then the
forms must indicate either that the debtor will be informed of the current
rates in writing at least every 15 months or that the debtor will be informed
in writing as to all of the rates within two months of a change in any of the
rates.
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