Mich. Admin. Code R. 550.211 - Credit life insurance prima facie rates

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

Rule 11.

(1) Single life credit life insurance prima facie premium rates for the insured portion of an indebtedness repayable in equal monthly installments, where the insured portion of the indebtedness decreases uniformly by the amount of the monthly installment paid, shall be as set forth in subdivisions (a) and (b) of this subrule. Single life credit life insurance prima facie premium rates, when the benefit provided is level term, shall be as set forth in subdivisions (a) and (c) of this subrule. Subdivisions (e) and (f) of this subrule refer to prima facie premium rates for other types of benefits either alone or in combination with the types of benefits applicable to subdivisions (a), (b), and (c) of this subrule. Subdivisions (a) to (g) read as follows:
(a) If premiums are payable on the monthly outstanding balance basis, the premium rate shall be the following amounts per month per $1,000.00 of outstanding balance:
(i) .8000 commencing September 1, 1987.
(ii) .7692 commencing September 1, 1988.
(iii) .7385 commencing September 1, 1989, and continuing thereafter.
(b) If premiums are payable on a single premium basis, where the benefit provided is decreasing term, the single premium rates shall be as follows:
(i) Where the term of insurance equals 12 months, the 12-month single-term premium (SP12) shall equal the following amounts per $100.00 of initial insured indebtedness:
(A) .52 commencing September 1, 1987.
(B) .50 commencing September 1, 1988.
(C) .48 commencing September 1, 1989, and continuing thereafter.
(ii) Where the term of insurance is different than 12 months, SP=SP12 x n/12, where SP is the single-term premium per $100.00 of initial insured indebtedness for insurance with a term different than 12 months, and n is the term of insurance in months.
(c) If premiums are payable on a single premium basis, where the benefit provided is level term, the single premium rates shall be as follows:
(i) Where the term of insurance equals 12 months, the 12-month single-term premium (SP12) shall equal the following amounts per $100.00 of initial insured indebtedness:
(A) .96 commencing September 1, 1987.
(B) .92 commencing September 1, 1988.
(C) .89 commencing September 1, 1989, and continuing thereafter.
(ii) Where the term of insurance is different than 12 months, SP=SP12 x n/12, where SP is the single-term premium per $100.00 of initial insured indebtedness for insurance with a term different than 12 months, and n is the term of insurance in months.
(d) Coverage may be offered at the insurer's option, based on either the monthly outstanding balance basis or single premium basis.
(e) The joint credit life rate on the basis specified in subdivision (a), (b), or (c) of this subrule shall be 1.5625 times the specific rate for that type of coverage.
(f) A combination of the appropriate rate for level term and the appropriate rate for decreasing term, with equal decrements, shall be used if coverage provided is a combination of level term and decreasing term, with equal decrements.
(g) If the benefits provided are other than those described in subdivisions (a) to (f) of this subrule, rates for such benefits shall be actuarially consistent with the rates provided in subdivisions (a), (b), (c), and (e) of this subrule.
(2) In connection with indebtedness that is repayable over a period of more than 120 months, when written on a single premium basis, the premium or other identifiable charge for credit life insurance shall be calculated to insure the scheduled amount required to liquidate the indebtedness, exclusive of any unearned interest or finance charge. In connection with indebtedness that is repayable over a period of more than 120 months, when written on a monthly outstanding balance basis, the premium or other identifiable charge for credit life insurance shall be calculated to ensure the actual amount required to liquidate the indebtedness, exclusive of any unearned interest or finance charge.
(3) The premium rates in subrule (1) of this rule shall apply to all policies which provide credit life insurance, which are issued with or without evidence of insurability, which are offered to all eligible debtors, and which do not contain any of the following:
(a) Exclusions, other than suicide within 1 year of the incurred indebtedness.
(b) Age restrictions, other than age restrictions that make debtors who are 71 or over ineligible for initial or continued coverage.
(c) An actively at work test other than one which requires that a debtor is or has been, for the previous 2 weeks, either regularly working a 30-hour week or more or is able to do so.
(4) Any underwriting decision shall be made within 60 days of the application for insurance. An insurer shall not engage in post-claim underwriting.
(5) The premium rates in subrule (1) of this rule shall also apply to all policies which provide credit life insurance, which are to be issued without underwriting, except underwriting that is based upon age, and which do not contain any of the following:
(a) Age restrictions, other than age restrictions that make debtors who are 71 or over ineligible for initial or continued coverage.
(b) A provision excluding or denying a claim for death resulting from preexisting conditions, except for those conditions for which the insured debtor received diagnosis or treatment within 6 months preceding the effective date of the debtor's coverage and which caused loss within the 6 months following the effective date of the coverage.
(6) A preexisting conditions exclusion permitted by subrule (5) of this rule shall apply only to accumulated indebtedness of more than $1,000.00 and where the diagnosis identified the condition.

Michigan Register, are renumbered R 550.201 to R 550.221.

Notes

Mich. Admin. Code R. 550.211
1987 MR 6, Eff. Sept. 1, 1987; 1995 MR 1, Eff. Feb. 3, 1995

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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