Mich. Admin. Code R. 550.202 - Policy or certificate content; acceptable language for notice of proposed insurance; open-end credit insurance; delivery, effective date, duration, issuance, amounts, and annual notice of continuation

Current through Vol. 22-05, April 1, 2022

Rule 2.

(1) Each individual policy or certificate of insurance shall set forth the information that is required by section 9 of the act.
(2) If a notice of proposed insurance is used pursuant to section 11 of the act, the following is acceptable language for such notice:

The front of this contract is marked to show if credit insurance applies to it. As shown by the marking, one or two kinds may apply. One is group credit life insurance. The other is group credit accident and health insurance. The insurer is named on this notice. The insurer may accept or reject the insurance. The insurance covers only those who sign the request for insurance. The charge is shown for each type of insurance to be bought. The term of insurance will begin on the date the debt begins. It will end on the date the debt is first set to end. If the insurer accepts the insurance, the insured will receive a certificate of insurance within 30 days. This will more fully describe the insurance. It will state any limits on coverage. If the debt is prepaid, a refund of the insurance charges will be made when due.

Any notice of proposed insurance given to a debtor shall be as complete as the notice provided in this subrule.

(3) When open-end credit insurance is provided, an individual policy, a certificate, or a notice of proposed insurance need only be delivered once for each account. Under open-end credit insurance, the effective date of the credit insurance policy or certificate is the date on which the debtor establishes the account and agrees to pay the required insurance charge, if any. Unless terminated earlier according to its terms, the open-end credit insurance shall remain in force until the account is cancelled. An individual policy, a certificate, or a notice of proposed insurance need not be issued each time the account is debited. This credit insurance is provided on the outstanding balance of the indebtedness; if no indebtedness exists, the insurance amount is zero and remains so until the account is debited. The creditor shall send an annual notice regarding the continuation of insurance to all account holders whose accounts have a zero balance. The notice shall explain how an account holder may cancel the credit insurance.
(4) When open-end credit insurance is provided, and where the policy contains a preexisting conditions exclusion permitted by the provisions of subrule 11(5) or subrule 12(2) of these rules, an insurer may apply a preexisting conditions exclusion to each advance under the open-end credit account. In applying this rule, all past and current payments made on the account by the debtor and insurer shall be applied to the earliest outstanding advances.
(5) If an insurer underwrites, then all the following provisions shall apply:
(a) All information from applicants shall be obtained through questions contained in the application form, which shall not be in the loan agreement.
(b) Questions shall be clear and unambiguous. So far as possible, questions shall be designed to elicit a yes or no answer.
(c) Questions to applicants shall be based upon objective matters, such as the diagnosis or treatment of medical conditions. Questions shall not be based upon an applicant's subjective judgment of health conditions.
(6) An insurer shall not engage in post-claim underwriting.
(7) Each individual policy or certificate of insurance shall contain a provision as follows, or other similar language approved by the commissioner of insurance:

Limit on certain defenses: If evidence of insurability or eligibility was required respecting this coverage, the insurer was responsible for making any underwriting decision, including any decision respecting eligibility, based upon that evidence within 60 days of the application for insurance. After that 60 days, failure of the insured to meet any underwriting criteria for the issuance of this coverage shall not be used to void the coverage or to deny a claim. However, material misrepresentations made by the applicant in the application for coverage may be used to void the coverage or to deny a claim. A misrepresentation is material where knowledge by the insurer of facts misrepresented on the application would have led to a refusal by the insurer to issue the certificate based upon the insurer's written underwriting criteria on the date of application.

(8) The statement in an application for insurance or notice of proposed insurance with respect to a preexisting conditions exclusion shall be printed in not less than 12-point type.
(9) If a credit insurance policy contains restrictions that make a debtor who attains a certain age ineligible for continued coverage, then all of the following provisions shall apply:
(a) Notice with respect to the age restriction shall appear in applications for insurance, notices of proposed insurance, and certificates of insurance.
(b) The reduced term of insurance due to the age restriction shall be taken into account in calculating the premium.
(c) The term of insurance shall extend beyond a debtor's attaining the age at which the restriction applies where the insurer has received premiums for a period of coverage after that date and has not returned the premiums within 60 days after their receipt by the insurer and before a loss occurs that is covered by the policy.

Michigan Register, are renumbered R 550.201 to R 550.221.

Notes

Mich. Admin. Code R. 550.202
1987 AACS; 1990 AACS; 1995 AACS

The rules of the Insurance Bureau, Department of Commerce, entitled "Credit Insurance Rates, Forms, and Standards," being R 550.101 to R 550.121 and appearing in Issue No. 6 of the 1987 Michigan Register, are renumbered R 550.201 to R 550.221.

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