Haw. Code R. § 16-6-12 - Credit disability insurance premium rates
(a) If
premiums are paid in one sum for the entire duration of the indebtedness, the
rates for $100 of initial insured indebtedness repayable in equal installments
as shown in the exhibit entitled "Credit Disability Insurance Premium Rates,"
dated July 1, 1988, located at the end of this chapter and which is made a part
of this section, shall be deemed reasonable in relation to the benefits
provided. Premium rates for all indebtedness repayable in installments shall be
consistent with the rates in the exhibit entitled "Credit Disability Insurance
Premium Rates," dated July 1, 1988, located at the end of this
chapter.
(b) If premiums are paid
on the basis of a premium per month per $1,000 of outstanding indebtedness,
these premiums shall be computed according to the following formula:
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where SPn = Single premium rate per $100 of initial insured indebtedness repayable in n equal monthly installments.
Opn = Monthly outstanding balance premium rate per $1,000.
n = Original repayment period in months.
(c) The actuarial equivalent of sections
16-6-11 and 16-6-12 if the coverage provided is a constant maximum indemnity
for a given period of time.
(d) An
appropriate combination of the premium rate for a constant maximum indemnity
for a given period of time and the premium rate for a maximum indemnity which
decreases in even amounts per month, if the coverage period is a combination of
a constant maximum indemnity for a given period of time after which the maximum
indemnity begins to decrease in even amounts per month.
(e) The actuarial equivalent of the rates in
subsections (a), (b), (c) and (d) if the benefits provided are other than those
described in these four subsections.
(f) The outstanding balance rate for credit
disability insurance, unlike credit life insurance, varies by term (months).
Because of this, it is difficult or impossible to compute a single maximum
outstanding balance rate applicable to all loans made under an open-end or
revolving credit plan. If the term of the loan is clearly defined, an
appropriate rate or rates can be computed. However, this is not the case in
most revolving credit situations.
(g) The premium rates specified in the table
at the end of this chapter are considered reasonable for policies which:
(1) Do not contain any exclusions except
disabilities resulting from intentional self-inflicted injury, pregnancy,
foreign residence, flights in non-scheduled aircraft, and pre-existing illness,
disease or physical condition for which the debtor received or was
professionally advised to obtain medical advice, consultations or treatment
during the six-month period preceding the effective date of the debtor's
coverage and which caused disabilities within the six months following the
effective date of coverage.
(2) Do
not contain any age restrictions, or only age restrictions making ineligible
for coverage those debtors sixty-five or over at the time the indebtedness is
incurred, or debtors who will have attained age sixty-six or over on the
maturity date of the indebtedness.
(3) May condition coverage on the debtor's
being in active employment at the time the indebtedness is incurred.
(4) Provide for a daily benefit equal in
amount to one-thirtieth of the scheduled monthly payments on the
indebtedness.
(5) Contain a
definition of "disability" which provides coverage during the initial twelve
months of disability even though the insured is able to perform an occupation
other than the one he held at the time disability occurred, except this
paragraph shall not apply to lump sum disability coverage.
(h) If any insurer files for approval any
forms providing coverage more restrictive than that described in subsection (g)
the insurer shall demonstrate to the satisfaction of the insurance commissioner
that the premium rates to be charged for such restricted coverage will produce
a loss ratio not less than the contemplated for standard coverage at the
premium rates described in subsections (a), (b), (c), (d), (e) and
(f).
Notes
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