Rules & Regulations of the State of Tennessee
Title 0780 - Commerce and Insurance
Subtitle 0780-01 - Insurance Division
Chapter 0780-01-04 - Credit Life Insurance and Credit Accident and Health Insurance
Section 0780-01-04-.04 - PROVISIONS OF POLICIES AND CERTIFICATES OF INSURANCE: DISCLOSURE TO DEBTORS

(1) When credit insurance is effected on a debtor it shall be evidenced by an individual policy or, in the case of group insurance, which policy or certificate shall be delivered to the debtor at the time the indebtedness is incurred or within thirty days after the debtor becomes insured with respect to his indebtedness.

(2) Each such individual policy, or certificate of group insurance shall, in addition to other requirements of law, set forth:

(3) If said individual policy, or certificate of group insurance is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for such policy or a notice of proposed group insurance, signed by the debtor and the creditor/agent shall be delivered to the debtor at the time such indebtedness is incurred. Such application or notice shall set forth the following:

(4) No policy of credit accident and health insurance may contain a provision excluding or denying a claim resulting from a contingency caused by or contributed to by pre-existing conditions which provision is more restrictive than the following:

"No insurance is provided hereunder if disability results from a disease, injury or condition of health for which the insured was hospitalized or received medical or surgical treatment or advise within the lesser of six months at the original term of the coverage immediately preceding the effective date of the coverage, if said death or disability occurs within the lesser of six months or the original term of the coverage immediately following such date, unless this policy (certificate) is issued in connection with a refinanced indebtedness, in which case, the effective date of the coverage shall be deemed to be the first date on which the insured became insured with respect to the indebtedness which was refinanced."

No such provision shall apply to credit life insurance.

This provision shall not be interpreted to preclude defense of a claim because of misrepresentation of facts in any evidence of insurability.

(5) Except as set forth in paragraph (4), no policy of credit accident and health insurance shall contain any provision which excludes or restricts liability in the event of disability by reason of conditions other than pregnancy, intentionally self-inflicted injuries, foreign travel or residence, travel in non-scheduled aircraft, war, or special hazards to which a person in military service is exposed in the line of duty and such other exclusions which have been shown to the satisfaction of the Commissioner not to be contrary to the standards prescribed in §§ 56-26-108 through 56-26-114.

Excepting in the case of insurance sold in connection with a refinanced indebtedness, credit accident and health insurance shall not be issued to a debtor who is not gainfully employed on the effective date of the policy or certificate.

(6) A credit insurance policy may exclude from those persons eligible for insurance, classes debtors determined by age and provide for the cessation of insurance or reduction in the amount of insurance upon attainment of specified ages. In the event of misstatement of age, where age is material to the acceptance or rejection of the risk, the insurer may provide for rescission of the policy and a refund of all premiums paid by the debtor.

(7) A group credit insurance policy under which premiums are paid to the insurer monthly on outstanding balances shall contain a provision that, in the event of termination of such policy by the insurer or creditor, thirty-one days' notice of such termination shall be given to each debtor insured under the policy by the creditor, unless there is immediate replacement of the coverage by the same or another insurer.

(8) A group credit insurance policy shall contain in substance the following provisions:

(9) If credit accident and health insurance is included as a separate policy, the policy shall in addition, include such of the provisions required by T.C.A. § 56-26-108, as are not inconsistent with the coverage provided. Disability, provisions in credit life insurance policies shall be so worded as to the payment of benefits that they are at least as favorable to the debtor as policies containing such provisions.

(10) Individual policies of credit life insurance shall include, in addition to the provisions set forth herein, such of the provisions of T.C.A. § 56-7-301, as are not inconsistent with the coverage.

(11) No policy or certificate of credit insurance shall be delivered or issued for delivery to any person in this state, unless the style, arrangement and overall appearance of the policy give no undue prominence to any portion of the text, and unless every printed portion of the text of the policy and of any endorsements or attached papers is plainly printed in light-face type of a style in general use, the size of which shall be uniform and not less than ten point with a lower case unspaced alphabet length not less than one hundred and twenty point (the, "text" shall include all printed matter except the name and address of the insurer, name or title of the policy, a brief description if any, captions and subcaptions, and any overprint or statement of Limitation of risk required by this or any other state to be more prominently displayed).

(12) Dividends on participating individual policies of credit insurance shall be payable to the individual insureds. Payment of such dividends may be deferred until such time as the policy is terminated. Dividends (or retrospective rate credits in the case of non-participating group policies) on group policies may be paid or credited to the creditor policyholder, subject to the restrictions hereinafter contained. Such policies may provide that dividends or retrospective rate credits which are in excess of the contribution of the creditor may be paid or credited to the individual debtors or applied in some manner for the sole benefit of debtors generally. Attention is called to T.C.A. §§ 56-8-104(7), 56-8201, and 56-8-202, with respect to calculation of dividends and rate credits. Insurers shall be prepared to demonstrate to the Commissioner that such dividends or retrospective rate credits are in fact equitably determined.

Dividends or retrospective rate credits shall be based on earned gross premiums and incurred claims as defined herein. Payment of dividends or retrospective rate credits based on any other assumption shall not be allowed.

Non-participating individual policies of credit insurance shall not be the subject of experience rating and no agent or creditor shall receive retrospective commissions or other compensation, direct or indirect, based on the experience of policies sold through him or on the lives of his debtors excepting as provided in this section.

For the purposes of T.C.A. § 56-4-204, retrospective rate credits shall be treated in the same manner as dividends in the computation of tax on gross premiums.