§ 23-83-105 - Debtor groups and credit union groups.
23-83-105. Debtor groups and credit union groups.
(a) Excluding an annuity policy, a policy issued to a creditor or its parent holding company or to a trustee or agent designated by two (2) or more creditors, which creditor, holding company, affiliate, trustee, or agent shall be deemed the policyholder, to insure debtors of the creditor, or creditors, subject to the following requirements:
(1) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor, or all of any classes thereof. The policy may provide that the term "debtor" shall include:
(A) Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;
(B) The debtors of one (1) or more subsidiary corporations; and
(C) The debtors of one (1) or more affiliated corporations, proprietorships, or partnerships if the business of the policyholder and of the affiliated corporations, proprietorships, or partnerships is under common control;
(2) (A) The premium for the policy shall be paid either from the creditor's funds or from charges collected from the insured debtors, or from both.
(B) Except as provided in subdivision (a)(3) of this section, a policy on which no part of the premium is to be derived from funds contributed by insured debtors specifically for their insurance must insure all eligible debtors;
(3) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer;
(4) The amount of the insurance on the life of any debtor shall at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor;
(5) The insurance may be payable to the creditor or any successor to the right, title, and interest of the creditor. The payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment; and
(6) Notwithstanding the provisions of subdivisions (a)(1)-(5) of this section, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a nondecreasing or level term plan. Insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan.
(b) Excluding an annuity policy, a policy issued to a credit union or to a trustee or agent designated by two (2) or more credit unions, which credit union, trustee, or agent shall be deemed the policyholder, to insure members of the credit union or for the benefit of persons other than the credit union, trustee, or agent or any of their officials, subject to the following requirements:
(1) The members eligible for insurance shall be all of the members of the credit union or all members of any classes thereof;
(2) The premium for the policy shall be paid by the policyholder from the credit union's funds and, except as provided in subdivision (b)(3) of this section, must insure all eligible members; and
(3) An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer.