West Virginia Code of State Rules
Agency 114 - Insurance Commission
Title 114 - LEGISLATIVE RULE INSURANCE COMMISSIONER
Series 114-07 - Premium Financing Of Life Insurance For College Students
Section 114-7-2 - Financing Arrangement

2.1. Financing agreement. -- If the insured is a minor and executes a promissory note in connection with the first year's premium, such note must be witnessed or acknowledged by at least one of the insured's parents or his guardian. It is not the intent of this section to enlarge the rights or duties of a minor as found in the statutory and common law of West Virginia, including, but not limited to, the provisions of section four, article six, chapter thirty-three of the West Virginia Code of 1931, as amended.

2.2. Disclosure in application-Down payment. -- The giving of a promissory note in connection with the first premium must be set out in the application over the applicant's signature, showing the amount of the note and the amount of the down payment made to an agent at the time of sale. A down payment in cash of at least ten dollars ($10.00) must be paid at the time the application is signed.

2.3. Down payment-Unfair practices. -- The down payment must be paid by the applicant in cash and any payment made, directly or indirectly, by the agent to or for the benefit of the applicant in connection with the sale shall be presumed to be an illegal rebate or inducement.

2.4. Same-Limitation on amount. -- If a note is taken to finance less than the first year's premium, the balance must be paid in cash by the applicant at the time the application is taken, except that such balance shall not be less than ten dollars ($10.00). The maximum amount of any premium financing arrangement which may be entered into shall be in accordance with reasonable and sound underwriting practices as determined by the insurer. A premium financing arrangement whereby an applicant becomes indebted in an amount sufficient to finance the first annual premium, exclusive of interest, shall be deemed prima facie in accordance with reasonable and sound underwriting practices. A financed program should not be sold to a undergraduate student on a basis where premiums would come due less than ninety (90) days after the anticipated date of graduation of said student.

2.5. Note and assignment attached to policy. -- A copy of the note and any assignment must be attached to the policy.

2.6. When note becomes payable. -- The maturity date of any promissory note payable in one lump sum at maturity, or the maturity date of any installment type note which provided for a "Balloon" payment, should not be less than ninety (90) days after the anticipated graduation date of the applicant: Provided, That any such note may contain an acceleration clause to become operable not less than thirty-one (31) days after default in the payment of any renewal premium. The obligation evidenced by a promissory note may be satisfied in advance of the maturity date without penalty.