New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter VII - Credit And Creditor Insurance
Part 187 - Credit Unemployment Insurance
Section 187.12 - Open-end loans and charge plans
Universal Citation: 11 NY Comp Codes Rules and Regs ยง 187.12
Current through Register Vol. 46, No. 39, September 25, 2024
(a) These rules and the provisions of all other sections of this Part not in conflict with the following will apply to credit insurance on open-end loans or charge plans:
(1) Definition of open-end loan
or charge plan. An open-end loan or charge plan is a line of credit loan, a
revolving charge plan or any other open-end self-replenishing credit
arrangement between the creditor and one of its customers which may be drawn
upon from time to time by the customer without renegotiating the lending
agreement. The customer may repay the full outstanding balance at any time, or
a specified minimum portion of the indebtedness (e.g., five percent, or a
minimum of $10).
(2) Debtor's
option for insurance. 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 must 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.
(3) Disclosure to debtors--policies and
certificates of insurance. The requirements in section
187.4(a) and (d)
of this Part for policies, certificates, applications, 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.
(4) Amount of insurance.
If at any time the insured debtor has no outstanding indebtedness, the amount
of his insurance will be zero. Subject to any maximums, the amount of a
periodic credit unemployment insurance benefit may not exceed a specified
percentage, not to exceed the greater of the amount of the minimum payment
which the debtor is required to make on the debtor's loan or charge plan as of
the monthly billing or statement date on or immediately preceding the date his
unemployment or labor dispute work stoppage commenced, or a specified
percentage, not to exceed six percent, of the debtor's unpaid indebtedness
balance as of the date the debtor's unemployment or labor dispute work stoppage
commenced. The payment of benefits may not be made for a period of unemployment
extending beyond the date the insured portion of the outstanding indebtedness
of the insured debtor's loan or charge plan becomes zero.
(5) Termination of insurance. 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 187.5(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.
(6) Additional rules.
(i) Credit unemployment insurance, may
include an actively at work requirement. This provision may apply separately to
each new indebtedness incurred by the debtor, and may not be reapplied to the
total indebtedness balance each time a new indebtedness is incurred.
(ii) The unemployment insurance shall exclude
from benefits, indebtedness incurred by the debtor while he was unemployed. A
premium may not be charged on any new indebtedness incurred by the debtor while
he is unemployed, unless included in the claim benefit. Any premium paid by the
insured which is subsequently refunded will not be considered to have been
charged to the debtor.
(iii) Total
benefits for any period of unemployment may be limited to an amount stated or
described in the policy.
(iv) The
insurance may include a reinstatement provision for a debtor who has been paid
the full benefits of the insurance.
(7) Payment of premiums and insurance
charges. 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;
or
(ii) the indebtedness balance in
the debtor's account on the billing date; or
(iii) by any other method as the
Superintendent of Insurance may approve.
(8) The charge for insurance may be added to
the debtor's indebtedness balance periodically and must be shown separately
from any other charge. If the credit unemployment insurance is written as a
package with other credit insurance, then monthly charge may be shown either
separately or as a package, however the rates for each coverage should be
disclosed separately. If the credit unemployment insurance is written along
with credit disability insurance but not as a package then each charge must be
displayed separately. Any credit life insurance premium must be displayed
separately.
(9) Premium and
insurance charge rates. Open-end loans or charge plans provide a minimum
payment which the debtor is required to make on his indebtedness balance. While
the amount of the minimum payment may change each time new indebtedness is
incurred, each new minimum payment sets a maximum number of months over which
the debtor must repay his indebtedness. The premium rate for credit
unemployment insurance on open-end loans may be:
(i) the appropriate premium rate determined
by section
187.7(c) of this
Part, for the initial maximum number of months over which the debtor is
required to repay the balance of his indebtedness after new indebtedness is
incurred;
(ii) the appropriate
premium rate for the maximum number of months remaining to be paid on the
indebtedness balance on the billing date;
(iii) the actuarially determined weighted
average term rate for the aggregate of the maximum repayment terms of all
insured loans or charge plans of the creditor; or
(iv) any other plan approved by the
Superintendent of Insurance.
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