Utah Admin. Code R590-91-4 - Rights and Treatment of Debtors

(1)

(a) If a creditor requires insurance, the creditor shall give the debtor the option to:

(i) furnish the required amount of insurance through an existing insurance policy the debtor owns or controls; or

(ii) obtain insurance coverage through any insurer authorized to transact insurance business in this state.

(b) If this subsection applies, the creditor shall inform the debtor of the debtor's right to provide alternative coverage before the transaction is completed.

(2) Evidence of coverage for credit insurance shall comply with Sections 31A-22-806 and 70C-6-104.

(3)

(a) If the named insurer does not accept the risk, the insurer shall notify the debtor that the insurer did not accept the risk and did not provide the insurance.

(b) A substituted insurer, if any, shall deliver the policy or certificate according to Subsection 31A-22-806(5).

(4) No subsequent certificate is needed on an open-end credit arrangement after the initial indebtedness.

(5) Each policy application must identify the producer, if any, and provide the information required by Subsection 31A-22-806(4)(b).

(6)

(a) If a debtor is covered by a group credit insurance policy in which each individual pays a single premium to the insurer, the policy shall include a provision indicating that if the policy is terminated for any reason, the debtor's insurance coverage shall continue for the period for which the debtor's premium has been paid.

(b) If a debtor is covered by a group credit insurance policy with a premium paid to the insurer on a monthly outstanding balance basis, the policy shall include a provision indicating that the debtor shall be given at least 30 days notice before the policy is terminated.

(c) The notice requirement in Subsection (5)(b) does not apply when:

(i) the debtor obtains replacement coverage from the same or another insurer;

(ii) in the same or greater amount; and

(iii) the replacement coverage takes place without lapse of coverage.

(d) The insurer shall provide the notice required in Subsection (5)(b) or, at the insurer's option, the creditor may provide the notice.

(7) If the creditor adds any identifiable insurance charge or premium for credit insurance to the indebtedness, and the creditor adds any direct or indirect finance, carrying, credit, or other service charge on the insurance charge or premium, the following shall occur:

(a) the creditor must remit the insurance charge or premium to the insurer; and

(b) the insurer shall collect the insurance charge or premium within 60 days after the insurance charge or premium is added to the indebtedness.

(8) A provision in an individual policy or certificate that sets a maximum limit on total payments shall only apply to the individual policy or certificate that contains the provision.

(9) For credit life insurance, when the indebtedness of a debtor is prepaid in a manner other than a lump sum accident and health payment, or as a result of the debtor's death:

(a) any credit life insurance covering the indebtedness shall be terminated; and

(b) the debtor shall be refunded the credit life insurance premium according to the formula in Section R590-91-9.

(10)

(a) For credit accident and health insurance, when the indebtedness of a debtor is prepaid in a manner other than a lump sum accident and health payment or as a result of the debtor's death:

(i) any credit accident and health insurance covering the indebtedness shall be terminated; and

(ii) the debtor shall be refunded the credit accident and health insurance premium according to the formula in Section R590-91-9.

(b) If there is a pending claim under the coverage when the indebtedness is paid, the refund amount may be determined as if the indebtedness was paid after the benefit payments terminated.

(c) No refund need be paid during any disability period when credit disability benefits are payable.

(d) A refund shall be computed as if the indebtedness was paid at the end of the disability period.

(11)

(a) If an indebtedness is prepaid from the proceeds of a debtor's credit life insurance policy or from a disability claim lump sum payment under the debtor's credit insurance policy, the insurer shall be responsible for ensuring that the following are paid to the insured debtor if living, or to the debtor's named beneficiary, other than the creditor, or to the debtor's estate:

(i) when the indebtedness is prepaid from the proceeds of a credit life insurance policy, or from the proceeds of a lump sum total and permanent disability benefit under credit life insurance coverage, the credit accident and health insurance premium refund made according to the formula in Section R590-91-9; or

(ii) when the indebtedness is prepaid from a lump sum disability claim under credit accident and health insurance coverage, the credit life insurance premium refund made according to the formula in Section R590-91-9.

(b) For a debt paid under Subsection (11)(a), the benefit amount in excess of the amount required to repay the indebtedness after crediting any unearned interest or finance charges.

(12)

(a) A credit life insurance benefit shall be consistent with the premium charge.

(b) Credit life insurance on preauthorized lines of credit not exceeding the commitment period may be written for the preauthorized amount on a nondecreasing or level term plan.

(c) The death benefit amount shall be the amount for which a premium is paid.

(d) When the insurance amount exceeds the unpaid indebtedness, the excess is payable to the debtor's named beneficiary, other than the creditor, or to the debtor's estate.

(13) A dividend on a participating individual credit insurance policy shall be payable to each individual insured.

Notes

Utah Admin. Code R590-91-4

Adopted by Utah State Bulletin Number 2022-07, effective 3/25/2022