Section R. 550.213 - Refund formulasRule 13.
(1) Refund formulas which any insurer desires to use shall be filed with, and approved by, the commissioner before use. The following methods are deemed appropriate for the plans described:(a) The pro rata unearned gross premium method shall be used for level term credit insurance and for credit insurance coverages under which premiums are collected from the debtor on a basis other than the single premium basis.(b) The "Rule of 78" or "sum of the digits" unearned premium method shall be used for insurance coverage which reduces in equal amounts per month and for which the premiums are collected on a single premium basis.(c) An appropriate combination of the pro rata method and the "Rule of 78" method or, at the option of the insurer, the pro rata method shall be used for credit life insurance provided as a combination of level and decreasing term coverage and for credit accident and health insurance wherein the insured is covered for a constant maximum indemnity for a given period of time, after which the maximum indemnity begins to decrease in equal amounts per month.(2) For other modes of premium payment and for other patterns of insurance, each insurer shall file for approval and include in the policy appropriate formulas or factors for refund or reference to such formulas or factors that are on file with the commissioner.(3) In the event of termination, a charge for credit insurance shall not be made for the first 15 days of a loan month and a full month may be charged for 16 days or more of a loan month, unless refunds are made on a pro rata basis for each day within the loan month.(4) The requirements that refund formulas be filed with the commissioner shall be considered fulfilled if the refund formulas are set forth in the individual policy or group certificate filed with the commissioner. If the appropriate refund formula is the "sum of the digits" formula, commonly known as the "Rule of 78," it shall be sufficient to refer to such formula by either phrase.(5) If the total of all refunds due a debtor or joint debtors is $1.00 or less, no refund need be made.(6) Refunds required to be made shall be paid or credited promptly to the person entitled thereto.Mich. Admin. Code R. 550.213