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Maine.gov > PFR Home > Insurance Regulation > Company Services > Review Checklists > Group Credit Life and/or Disability - CR04G and/or CR02G

Maine Bureau of Insurance
Form Filing Review Requirements Checklist
Group Credit Life and/or Disability

CR04G and/or CR02G
(Amended 11/2011)

REVIEW REQUIREMENTS

REFERENCE

DESCRIPTION OF REVIEW STANDARDS REQUIREMENTS

LOCATION OF
STANDARD IN FILING

Credit Life & Disability:
Waiting Period

9-A M.R.S.A.
§ 4-104

The waiting period can be no less than 30 days.

 

Credit Life & Disability:
Scope of Provisions

 

24-A M.R.S.A.
§ 2851

All life insurance and all health insurance in connection with loans or other credit transactions, credit property insurance, credit involuntary unemployment insurance and other consumer credit insurance specifically authorized by the superintendent in rules adopted pursuant to section 2865 are subject to this chapter, except the following:

  1. Long-term loan. Insurance in connection with a loan or other credit transaction of more than 15 years' duration;

 

  1. Isolated transactions. Insurance issued in an isolated transaction on the part of the insurer not related to an agreement or a plan for insuring debtors of the creditor;
  1. Real estate loan. Insurance in connection with real estate loans when the charge, if any, to the debtor is periodic and not financed;

 

  1. Casualty insurance. Insurance issued pursuant to section 707, subsection 1, paragraph I against loss or damage resulting from failure of debtors to pay their obligations to the insured; or
  1. Debt cancellation agreements. Debt           cancellation agreements entered into between financial institutions or credit unions and their debtors

 

Credit Life & Disability:
Forms Available

24-A M.R.S.A.
§ 2854

Consumer credit insurance may be issued only in the following forms: 
 
     1. Individual life. Individual policies of life insurance issued to debtors on the term plan; 
 
     2. Individual accident and health. Individual policies of health insurance issued to debtors on a term plan, or disability benefit provisions in individual policies of credit life insurance; 
 
     3. Group life. Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on the term plan;
 
     4. Group accident and health. Group policies of health insurance issued to creditors on a term plan insuring debtors, or disability benefit provisions in group credit life insurance policies to provide such coverage;
 
     4-A. Individual credit property insurance. Individual policies of property insurance on property that is purchased on credit or pledged as collateral on a loan when the insurance is purchased by or issued to the debtor in connection with that loan or credit transaction;
 
     4-B. Group credit property insurance. Group policies of property insurance on property that is purchased on credit or pledged as collateral on a loan when the insurance is purchased by or issued to the debtor in connection with that loan or credit transaction;
 
     4-C. Individual credit involuntary unemployment insurance. Individual involuntary unemployment policies insuring a debtor pursuant to or in connection with a specific loan or other credit transaction but not including disability insurance policies; 
 
     4-D. Group credit involuntary unemployment insurance. Group involuntary unemployment policies insuring a debtor pursuant to or in connection with a specific loan or other credit transaction but not including disability insurance policies; or
 
     5. Combination. A combination under subsections 1 and 2, or under 3 and 4.

 

Credit Life & Disability:
Amounts of Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24-A M.R.S.A.
§ 2855

1.  Credit Life Insurance

  1. The amount of credit life insurance shall at no time exceed the unpaid amount financed plus earned interest and an allowance for delinquencies as determined by the superintendent or, in the case of open-end credit, the balance upon which a finance charge may be imposed, plus earned interest and an allowance for delinquencies as determined by the superintendent.

 

 2.  Agricultural Credit Commitments

Notwithstanding subsection 1, paragraph A, insurance on agricultural credit transaction commitments not exceeding 2 years in duration may be written up to the amount of the loan commitment, on a nondecreasing or level term plan.

 

3.   Educational Credit Commitments

Notwithstanding subsection 1, paragraph A, insurance on educational credit transaction commitments may be written for the amount of the portion of such commitment that has not been advanced by the creditor.

4.  Credit Health Insurance

  1. Coverage limited. The total amount of indemnity payable by credit health insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness; and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments.

 

Credit Life:
Insurability

 

24-A M.R.S.A.
§ 2617

The policy shall contain a provision setting forth the conditions under which the insurer reserves the right to require E of I satisfactory to the insurer.

Insurer may exclude or limit coverage on any person if E of I is not satisfactory.

 

Credit Life &
Disability:
Term of Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24-A M.R.S.A.
§ 2856

The term of insurance shall commence on the date when the debtor becomes obligated to the creditor.

If E of I is required and such evidence is furnished more than 30 days after the date when the debtor becomes obligated to the creditor, the insurance may commence on the date the insurer determines the evidence to be satisfactory. There shall be a refund or adjustment of any charge to the debtor for insurance during the period which s/he was not covered.

The term of insurance shall not extend more than 15 days beyond the scheduled maturity date, except when extended at no cost to the debtor.

If the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness.

In all cases of termination prior to maturity, a refund shall be paid or credited promptly. Formulas for computing refunds will be filed.
 
The Rule of 78 is not allowed for calculating refund factors. This has been disallowed since 1987.

 

Credit Disability:
Individual Certificates

 

 

 

 

 

24-A M.R.S.A.
§ 2821

 

 

 

 

 

Except in the case of blanket health insurance, a provision that the insurer shall issue to the policyholder, for delivery to each member of the insured group, an individual certificate or printed information setting forth in summary form a statement of the essential features of the insurance coverage of such employee or such member and in substance the provisions of sections 2821 to 2828. The insurer shall also provide for distribution by the policyholder to each member of the insured group a statement, where applicable, setting forth to whom the benefits under such policy are payable.

 

Credit Life & Disability:
Policy Provisions

 

 

 

 

 

 

 

 

 

 

 

24-A M.R.S.A.
§ 2857

Policy or certificate must be delivered to the debtor.

Content of Certificate must include:

Name and Home Office address of insurer;
Name of the debtor;
Premium or amount of payment (separated for life & health, if separate identifiable charges);
Description of the coverage, including amount and term of coverage;
Exceptions, limitations and restrictions of policy (Suicide exclusion is limited to two (2) years -- Rule 220 & 24-A §2525)

Conditions under which the policy may be terminated must be in bold print.

Must state that the benefit is paid to the creditor to reduce or extinguish the unpaid indebtedness must disclose that the coverage under the policy may not completely pay off the indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any excess is payable to a beneficiary, other than the creditor, named by the debtor or to the debtor's estate.


Must state that the insured has a 30-day "free look" and the insured may cancel the contract for any reason for a full refund of premium

 

Credit Life & Disability:
Filing of Forms

24-A M.R.S.A.
§ 2858

All policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders delivered or issued for delivery in this State and the schedules of premium rates pertaining thereto shall be filed with the superintendent.

 

Credit Life & Disability:
Application or Notice of Proposed Insurance

RULE 220

     4.    Application or notice of proposed insurance

Title 24-A M.R.S.A., Section 2857, Subsection 4 requires the copy of the application or notice of proposed insurance to be separate from the credit instrument, unless the information is prominently set forth in it.

 

Credit Life & Disability:
Amount of Insurance

 

 

 

RULE 220

  1. Amount of insurance

 

C.   If the benefit under credit life or credit disability insurance will be insufficient to extinguish the amount of indebtedness at the time of death or disability (excluding any indebtedness due only to delinquency in payments by the debtor), this fact must be prominently disclosed in the group certificate or individual policy.

 

Credit Life :
Grace Period

24-A M.R.S.A.
§ 2614

The policyholder is entitled to a grace period of 31 days for the payment of any premium due.
Policy must remain inforce during the grace period.

 

Credit Life:
Incontestability

 

 

 

24-A M.R.S.A.
§ 2615

The group life insurance policy shall contain a provision that the validity of the policy shall not be contested, except for non-payment of premium, after it has been inforce for two (2) years from its date of issue.

Note: fraud language is not permitted in Maine's incontestability provision.

 

Credit Life & Disability:
Statements in Application

24-A M.R.S.A.
§ 2616
§ 2818

    There shall be a provision that all statements contained in any such application for insurance shall be deemed representations and not warranties. 

 

Credit Life:
Misstatement of Age

24-A M.R.S.A.
§ 2618

Policy shall contain a provision specifying an equitable adjustment of premiums or of benefits or both to be made in the event the age of a person has been misstated. A clear statement of the method of adjustment is required.

 

Credit Life:
Information to Debtor

 

24-A M.R.S.A.
§ 2624

A policy insuring the lives of debtors shall contain a provision that the insurer will furnish to the policyholder for delivery to each debtor, a certificate describing the coverage and specifying that the death benefit shall first be applied to reduce or extinguish the debt.

 

Credit Life &
Disability:
AIDS/ARC

 

 

 

 

24-A M.R.S.A.
§ 2629
§ 2846
§ 2159-4

No group life or health insurance policy delivered or issued for delivery in this State may provide more restrictive coverage for death, or benefits for sickness or disablement, or the related expenses resulting from Acquired Immune Deficiency Syndrome (AIDS), AIDS Related Complex (ARC) or HIV related diseases than for any other sickness or disabling condition or exclude benefits for AIDS, ARC or HIV related diseases except through an exclusion under which all sicknesses and diseases are treated the same. This section shall not apply to a policy providing benefits for specific diseases or accidental injury only. 

 

Credit Life:
Suicide

 

24-A M.R.S.A
§ 2630

A group life insurance policy delivered or issued for delivery in this State may not contain a more restrictive exclusion from liability for death resulting from suicide than death by suicide, while sane or insane, within 2 years from the date coverage commences or within 2 years of an increase in coverage. 

 

Credit Disability:
Applicant’s Statements; waivers, amendments

 

 

24-A M.R.S.A.
§ 2817

There shall be a provision that no statement made by the applicant for insurance shall avoid the insurance or reduce benefits thereunder unless contained in the written application signed by the applicant; and a provision that no agent has authority to change the policy or to waive any of its provisions; and that no change in the policy shall be valid unless approved by an officer of the insurer and evidenced by indorsement on the policy, or by amendment to the policy signed by the policyholder and the insurer.

 

Credit Life & Disability:
Statements in Application

24-A M.R.S.A.
§ 2616
§ 2818

There shall be a provision that all statements contained in any such application for insurance shall be deemed representations and not warranties. 

 

Credit Disability:
New employees, members

24-A M.R.S.A.
§ 2819

 

There shall be a provision that all new employees or new members, as the case may be, in the groups or classes eligible for such insurance must be added to such groups or classes for which they are respectively eligible. 

 

Credit Disability:
Renewal of Policy

24-A M.R.S.A.
§ 2820

    There shall be a provision stating the conditions under which the insurer may decline to renew the policy.

 

Credit Disability:
Age Limits

 

24-A M.R.S.A.
§ 2822

 

 

    There shall be a provision specifying the ages, if any there be, to which the insurance provided therein shall be limited; and the ages, if any there be, for which additional restrictions are placed on benefits and the additional restrictions placed on the benefits at such ages. 

 

Credit Disability:
Notice of Claim

 

 

24-A M.R.S.A.
§ 2823

    There shall be a provision that written notice of sickness or of injury must be given to the insurer within 30 days after the date when such sickness or injury occurred. Failure to give notice within such time shall not invalidate nor reduce any claim, if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible. 

 

Credit Disability:
Proof of Loss

 

 

 

 

 

 

24-A M.R.S.A.
§ 2824

 There shall be a provision that in the case of claim for loss of time for disability, written proof of such loss must be furnished to the insurer within 30 days after the commencement of the period for which the insurer is liable, and that subsequent written proofs of the continuance of such disability must be furnished to the insurer at such intervals as the insurer may reasonably require, and that in the case of claim for any other loss, written proof of such loss must be furnished to the insurer within 90 days after the date of such loss.

Failure to furnish such proof within such time shall not invalidate nor reduce any claim, if it shall be shown not to have been reasonably possible to furnish such proof and that such proof was furnished as soon as was reasonably possible. 

 

Credit Disability:
Forms for Proof of Loss

 

 

 

 

24-A M.R.S.A.
§ 2825

    There shall be a provision that the insurer will furnish to the policyholder such forms as are usually furnished by it for filing proof of loss. If such forms are not furnished before the expiration of 15 days after the insurer received notice of any claim under the policy, the person making such claim shall be deemed to have complied with the requirements of the policy as to proof of loss upon submitting within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, character and extent of the loss for which claim is made. 

 

Credit Disability:
Examination, Autopsy

 

24-A M.R.S.A.
§ 2826

    There shall be a provision that the insurer shall have the right and opportunity to examine the person of the insured when and so often as it may reasonably require during the pendency of claim under the policy and also the right and opportunity to make an autopsy in case of death where it is not prohibited by law. 

 

Credit Disability:
Time for Payment of Benefits

24-A M.R.S.A.
§ 2827

     There shall be a provision, subject to due proof of loss, all accrued benefits payable under the policy for loss of time will be paid not later than at the expiration of each period of 30 days during the continuance of the period for which the insurer is liable, and that any balance remaining unpaid at the termination of such period will be paid immediately upon receipt of such proof. 

 

Credit Disability:
Time for Suits

24-A M.R.S.A.
§ 2828

There shall be a provision that no action at law or in equity shall be brought to recover on the policy prior to the expiration of 60 days after proof of loss has been filed in accordance with the requirements of the policy and that no such action shall be brought at all, unless brought within 2 years from the expiration of the time within which proof of loss is required by the policy. 

 

Credit Disability:
Exceptions

24-A M.R.S.A. §2829

1. Any portion of any such policy, delivered or issued for delivery in this State, which purports, by reason of the circumstances under which a loss is incurred, to reduce any benefits promised thereunder to an amount less than that provided for the same loss occurring under ordinary circumstances, shall be printed in such policy and in each certificate issued thereunder, in bold face type and with greater prominence than any other portion of the rest of such policy or certificate, respectively; and all other exceptions of the policy shall be printed in the policy and certificate with the same prominence as the benefits to which they apply.

 

AIDS and Medical Lifestyle Standards

Rule 490

The purpose of this rule is to clarify the standards applicable to written informed consent forms required to be completed by persons required to take a test for the presence of the antibody to the Human Immunodeficiency Virus (HIV) or for the Human Immunodeficiency Antigen by an insurer, nonprofit hospital service organization, nonprofit medical service organization, or a nonprofit health care plan, to establish standards for pretest and post-test counseling required to be provided to persons subject to testing as required by 5 M.R.S.A. Section 19203-A, and to establish standards for medical and lifestyle application questions and underwriting.

 

Stranger Originated Life Insurance

24-A M.R.S.A. §6802-A(6) and §6802-A(12-A)

It is a fraudulent act for an insurance company or viatical settlement provider to commit, or permit its employees or its agents to engage in entering into stranger-originated life insurance.

"Stranger-originated life insurance" means an act or practice to initiate a life insurance policy for the benefit of a person who, at the time of the origination of the policy, has no insurable interest in the insured. "Stranger-originated life insurance" includes, but is not limited to, cases in which life insurance is purchased with resources or guarantees from or through a person who, at the time of the inception of the policy, could not lawfully initiate the policy and when, at the time of policy inception, there is an arrangement or agreement to directly or indirectly transfer the ownership of the policy or the policy benefits to another person. A trust that is created to give the appearance of insurable interest and is used to initiate policies for investors violates insurable interest laws and the prohibition against wagering on life.”

 

Last Updated: August 22, 2012