N.Y. Comp. Codes R. & Regs. tit. 11 § 185.13

Current through Register Vol. 46, No. 45, November 2, 2024

Section 185.13 - Open-end loans and charge plans

(a) These rules, and the provisions of all other sections of this Part not in conflict with the following, shall apply to credit insurance on open-end loans or charge plans:

(1) If a premium or charge for the insurance is to be made to the debtor by the creditor, insurance may be issued on a debtor only if he elects in writing to become insured and agrees to pay the premium or charge for the insurance. The debtor shall be given the right to discontinue the insurance at any time by advance notice to the creditor. If the insurance benefits are reduced, or if the premium rate for the insurance is increased, the creditor shall give the insured debtors advance notice of the change and remind them of their right to discontinue the insurance.

(2) The disclosure requirements in section 185.5(a) or (d) of this Part for policies, certificates, or notices of proposed insurance shall apply only when the credit insurance on the open-end loan or charge plan is first issued. A new policy or certificate of insurance need not be issued each time the insured debtor incurs indebtedness on the account.

(3) If the insured person has incurred no indebtedness or if at any time he has repaid all outstanding indebtedness, the amount of his insurance will be zero. Subject to any maximums, the amount of credit life insurance on an insured debtor shall be the unpaid indebtedness balance owing by him on the date of his death, including any amount received by him during his lifetime and recorded after his death, including any accrued interest. The amount of a periodic credit disability insurance benefit shall not exceed the greater of the amount of the minimum payment which the debtor is required to make on his loan or charge plan on the date his disability commenced, or a specified percentage, not to exceed six percent, of the debtor's unpaid indebtedness balance on the date his disability commenced. For credit disability policies with a maximum amount of insurance of $2,500 or less, the benefit may be written for a lump sum payment with a waiting period of 90 days and the amount payable equal to the amount outstanding on the day of disability.

(4) A debtor's insurance may be terminated on the earliest of any of the following dates, but such termination of insurance shall not prejudice a claim existing on date of termination:

(i) on the date requested by the debtor or the date he fails to pay any required premium or charge on insurance;

(ii) on the premium billing date coinciding with or next following the date the debtor attains a stated age, which will not be less than age 66;

(iii) on the date the open-end loan or charge plan is terminated;

(iv) on the date the debtor is in default, as defined by the creditor's rules;

(v) subject to the notice requirement of section 185.5(h) of this Part, on the date the group policy is terminated; or

(vi) on the date the policyholder terminates coverage on all revolving accounts of the same class as that held by the debtor, subject to a minimum 31 day notice to all debtors.

(5) Credit disability insurance may include the preexisting exclusion specified in section 185.5(e) of this Part. This provision shall apply separately to each new indebtedness incurred by the debtor, and shall not be reapplied to the total indebtedness balance each time a new indebtedness is incurred.

(6) The disability insurance shall exclude from benefits, indebtedness incurred by the debtor while he was disabled. An identifiable charge shall not be charged on any new indebtedness incurred by the debtor while he is receiving disability benefits, unless the forms clearly indicate that the debtor may request the coverage to terminate and that such termination will in no way affect a claim incurred prior to the termination. Any identifiable charges paid by the insured after the date of such termination are subject to the refund requirements of section 185.8 of the Part.

(7) Total benefits for any period of disability may be limited to any or all of the following:

(i) an amount stated in the policy;

(ii) an amount described in the policy;

(iii) a specified number of payments; or

(iv) until a specified age.

If subparagraph (iv) of this paragraph is used then such age may not be less than 66 and benefits may not terminate because of the attainment of the specified age before the earlier of either when 12 months of benefits have been paid or when the benefits would have stopped if the termination due to age did not appear.

(8) The insurance may include a reinstatement provision for a debtor who has been paid the full benefits of the insurance. In the event the debtor has been paid the full benefits, the insurer shall so notify the insured, describe the circumstances under which he would be again eligible for benefits, describe the amount of such benefits if less than full benefits are available and give the insured 90 days to cancel coverage with a full refund of any identifiable charges made during the 90 day period.

(9) Insurance on a debtor for an open-end loan or charge plan, may only be provided on a periodic outstanding balance premium basis. The periodic charge may be applied to either:

(i) the average daily indebtedness balance in the debtor's account during the billing period;

(ii) the indebtedness balance in the debtor's account on the billing date; or

(iii) by any other method as the superintendent may approve.

The method used shall be set forth in the group policy and certificate.

(10) The charge for insurance may be added to the debtor's indebtedness balance periodically and shall be shown separately from any other charge. If the charges for credit life, credit accident and health and credit unemployment insurance are not shown separately, then the forms must indicate either that the debtor will be informed of the current rates in writing at least every 15 months or that the debtor will be informed in writing as to all of the rates within two months of a change in any of the rates.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 185.13