38.2-3726 - Credit life insurance rates.
§ 38.2-3726. Credit life insurance rates.
A. The benefits provided by any credit life insurance form shall be deemedreasonable in relation to the premium charged or to be charged if the ratesdo not exceed the rates set forth below, except as such rates are modifiedpursuant to the requirements of § 38.2-3730:
1. $.7519 per month per $1,000 of outstanding insured indebtedness ifpremiums are payable on a monthly outstanding balance basis.
2. $.48 per $100 of initial indebtedness repayable in twelve equal monthlyinstallments. If premiums are payable on a single premium basis and theamount of the insurance decreases in equal monthly amounts, the followingformula shall be used to develop single premium rates from the outstandingbalance rate:
Sp = (n+1) Op
20 (1 + .0363 n)
24
where Sp is the single term premium per $100 of initial insured indebtedness,
n is the credit term in months, and Op is the monthly outstanding balance rate
per $1,000 of outstanding insured indebtedness.
3. If premiums are payable on a single premium basis when the benefit provided
is level term, the following formula shall be used to develop single premium
rates from the outstanding balance rate:
Sp = n Op
10 (1 + .055 n)
24
where Sp is the single term premium per $100 of initial insured indebtedness,n is the credit term in months, and Op is the monthly outstanding balancerate per $1,000 of outstanding insured indebtedness.
4. If the benefits provided are other than those described in theintroduction to this subsection, premium rates for such benefits shall beactuarially consistent with the rates provided in the above subdivisions.
5. Joint coverage on any of the bases in this subsection shall not exceed 165percent of the specific rate for that type of coverage.
B. The premium rates in subsection A shall apply to policies providing creditlife insurance to be issued with or without evidence of insurability, to beoffered to all debtors, and, except as set forth below, containing: (i) noexclusions other than suicide within six months of the incurred indebtedness;and (ii) age restrictions making ineligible for coverage debtors age seventyor over at the time the indebtedness is incurred or debtors having attainedage seventy or over on the maturity date of the indebtedness.
1. Insurance written in connection with an open-end credit plan may providefor the cessation of insurance or a reduction in the amount of insurance uponattainment of an age not less than seventy.
2. On insurance written in connection with closed-end credit plans andopen-end credit plans where the amount of insurance is based on or limited tothe outstanding unpaid balance, no provision excluding or denying a claim fordeath resulting from a preexisting condition except for those conditions forwhich the insured debtor received medical diagnosis or treatment within sixmonths preceding the effective date of coverage and which caused the death ofthe insured debtor within six months following the effective date ofcoverage. The effective date of coverage for each part of the insuranceattributable to a different advance or charge to the plan account is the dateon which the advance or charge is posted to the plan account.
3. At the option of the insurer and in lieu of a preexisting conditionexclusion on insurance written in connection with open-end credit where theamount of insurance is based on or limited to the outstanding unpaid balance,a provision limiting the amount of insurance payable on death due to naturalcauses to the balance as it existed six months prior to the date of death ifthere have been one or more increases in the outstanding balance during suchsix-month period and if evidence of insurability has not been required in thesix-month period prior to date of death.
(1992, c. 586.)