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(a) A creditor that offers more than one plan of consumer credit insurance for the same type of loan transaction shall inform each debtor of all applicable plans.
(b) A group consumer credit insurance policy under which an insured debtor pays a single premium to the insurer must provide that, if the group policy is terminated, insurance coverage must continue for the insured debtor's contract period.
(c) A group consumer credit insurance policy under which an insured debtor pays premiums on a monthly outstanding-balance basis must provide that, if the group policy is terminated for any reason, the insurer, or the creditor at the option of the insurer, will notify the insured debtor that coverage will be discontinued 30 days after the date the notice is mailed. The notice is not required if replacement coverage is provided by the same or another insurer in the same or greater amount without lapse of coverage.
(d) If an insured debtor prepays the indebtedness from sources other than benefits from a policy of consumer credit insurance, the consumer credit insurance covering the indebtedness must be terminated and the unearned premium refunded to the debtor in accordance with AS 21.57.090 and 3 AAC 28.360. If a claim under the credit disability insurance or credit unemployment insurance coverage is in progress at the time of prepayment, the claim must continue as if the debt was not prepaid.
(e) If a debtor prepays the indebtedness by the proceeds of a credit life insurance policy covering that debtor, by a lump sum payment of a disability claim under a credit disability insurance policy covering that debtor, or a lump sum payment of an unemployment claim under a credit unemployment insurance policy covering that debtor, the insurer shall, in accordance with AS 21.57.090 and 3 AAC 28.360, pay to the debtor, to the beneficiary named by the debtor other than the creditor, or to the debtor's estate the amount of the benefits in excess of the amount required to repay the indebtedness after crediting any unearned interest or finance charges, and the following unearned premiums:
(1) the credit disability insurance premium and the credit unemployment premium if the prepayment is from the proceeds of a credit life insurance policy;
(2) the credit life insurance premium and the credit unemployment premium if the prepayment is from the proceeds of a credit disability policy;
(3) the credit life insurance premium and the credit disability premium if the prepayment is from the proceeds of a credit unemployment policy.
(f) If a creditor adds insurance charges or premiums for consumer credit insurance to the indebtedness, and the creditor makes any direct or indirect finance, carrying credit, or service charge to the debtor on those insurance charges or premiums, the creditor shall remit and the insurer shall collect those insurance charges or premiums within 60 days after they are added to the indebtedness.
(g) The effective date of insurance coverage on renewed, refinanced, or consolidated indebtedness, up to the amount of indebtedness immediately before the date of renewal, refinance, or consolidation, is the effective date of the insurance coverage on the indebtedness immediately before renewal, refinance, or consolidation. If the renewed, refinanced, or consolidated indebtedness is larger than the indebtedness immediately before the date of renewal, refinance, or consolidation, the insurer may set the effective date of insurance coverage on the difference to be the date of renewal, refinance, or consolidation.
(h) A provision in a policy or certificate that sets a maximum limit on total payments must apply only to that policy or certificate.
(i) If a creditor has opened a line of credit for a debtor and, in accordance with AS 21.57.040 (a)(1), the amount of insurance exceeds the amount of debt, the amount payable in the event of the death of the debtor must be the total amount on which the last premium or insurance charge was computed less the total amount of payments that have been applied against the debt since the date the last premium or insurance charge was debited to the account.
History: Eff. 3/29/81, Register 77; am 6/6/93, Register 126; am 7/2/2001, Register 158
Authority: AS 21.06.090
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Last modified 7/05/2006