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.
