Okla. Admin. Code § 365:10-5-62

Current through Vol. 42, No. 7, December 16, 2024

Section 365:10-5-62 - Disclosure provision

(a)Purpose. The purpose of this subsection is to disclose certain provisions to debtors of a creditor relating to credit life insurance and credit accident and health insurance. Such disclosures are designed to:

(1) Mandate the delivery of evidence of insurance to such debtors at the time indebtedness is incurred;

(2) Mandate the use of an application form if an individual policy or group certificate is not delivered at the time the indebtedness is incurred;

(3) Prohibit certain policy provisions;

(4) Specify certain requirements for group certificates; and

(5) Provide for termination of coverage.

(b)Debtors choice of insurer.

(1) When credit life or credit accident and health insurance may be lawfully required as additional security for any indebtedness, the person processing the indebtedness transaction shall advise the debtor prior to completion of the transaction of the debtor's right to furnish the required amount of insurance through existing policies of insurance owned or controlled by the debtor or to procure the required coverage from any insurer authorized to transact insurance business within the State.

(2) When credit life or credit accident and health insurance may not be lawfully required as additional security for any indebtedness, the person processing the indebtedness transaction shall verbally and in written form signed by the debtor, advise the debtor that credit life insurance and/or credit accident and health insurance is not mandatory and is not a factor in the approval by the creditor of the extension of credit to the debtor.

(c)Delivery when indebtedness incurred. All credit life insurance and credit accident and health insurance shall be evidenced by an individual policy, or in the case of group insurance by a certificate of insurance, which in either case shall be delivered to the debtor within thirty days after the term of the insurance commences. If there occurs any failure or delay in providing such insurance, the creditor shall notify the debtor in writing of such failure or delay within thirty (30) days following the application or written request for such insurance.

(d)Policy provisions.

(1) Every individual policy or group certificate of credit life insurance or credit accident and health insurance delivered or issued for delivery in this State shall, after the effective date of this Part, in addition to the other requirements of law, set forth:

(A) the name and home office address of the insurer;

(B) the name or other identification of the insured debtor (or debtors, if joint life);

(C) the full amount of premium or total identifiable insurance charge, if any, to the debtor, stated separately for credit life insurance, credit accident and health insurance, and for any additional benefits, or if appropriate, the method used for computing insurance charges from time to time;

(D) the amount of the insurance coverage;

(E) the amount of the debt;

(F) the effective date of the insurance, and the termination date of insurance. The termination date shall not extend more than fifteen (15) days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor. If the indebtedness is an open end revolving loan or charge account, in lieu of the termination date, the conditions of termination shall be set forth;

(G) a description of the coverage;

(H) any and all exceptions, limitations and restrictions to the coverage;

(I) a statement that the benefits, to the extent necessary to extinguish the unpaid amount of the indebtedness, will be paid to the creditor as first beneficiary, and will be applied by the creditor to reduce or extinguish such indebtedness; for the credit life insurance, a statement that wherever the insurance benefit may exceed the amount necessary to extinguish the indebtedness, any such excess amount of benefits shall be paid by separate check or draft of the insurer to a second beneficiary named by the debtor, or a second insured debtor or to the surviving spouse or to the debtor's estate;

(J) The following statements:

(i) Except as otherwise expressly permitted by law, the creditor shall not require that any benefit be applied to the reduction of any indebtedness other than the indebtedness in connection with which the insurance was written;

(ii) a statement indicating that upon discharge of the indebtedness, the insurance may be terminated, though without prejudice to any claim originating prior to such termination, and that in all cases of termination prior to scheduled maturity, except as otherwise provided by law, a refund of any unearned amount of premium paid by or charged to the debtor for insurance shall be made in accordance with the appropriate formula set forth in this Part. Such refund shall be paid to the debtor, or to the debtor's estate if the debtor is not living. No such refund is required if the total amount thereof is less than One Dollar ($1.00).

(K) A statement that the debtor may terminate the insurance and receive, at the option of the insurer, either a refund or credit against indebtedness for all insurance charges or premium paid, by mailing or delivering written notice of termination to the insurer or creditor within ten (10) days of delivery of the policy or certificate to the debtor. The statement shall be set forth in a separate statement or enclosure delivered with the policy or certificate, or, it must appear immediately below the consumer warning required by 365:10-5-62(e)(2)(J) of this Part. The statement shall be stamped or imprinted in not less than 14 point type.

(2) If the insurance is provided in relation to a revolving charge account or a revolving loan account, 365:10-5-62(d)(1)(E) shall not apply.

(3) If an accident and health insurance claim is in progress at the time of discharge of the indebtedness, such claim shall continue during the originally scheduled term of insurance, as if there has been no such discharge of indebtedness, and the accident and health premium paid are then due and payable to the insurer is earned and no refund is required. If, during the pendency of an accident and health insurance claim, the insurer elects to prepay and discharge the indebtedness thereon immediately in one payment, the accident and health premium paid or then due and payable to the insurer is earned and no refund is required; however, in any such instance, the life insurance premium is not deemed earned and shall be refunded in accordance with this Part. In the case of termination of credit life insurance due to death of the insured debtor, the life insurance premium paid or then due and payable to the insurer is deemed earned, and no refund thereof is required; however, in any such instance, the accident and health insurance premium is not deemed earned and shall be refunded to debtor's estate in accordance with this Part.

(e)Application provisions.

(1) If said individual policy or group certificate of insurance is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for such individual policy or notice of such proposed group insurance shall be delivered to the debtor at the time such indebtedness is incurred. However, when insurance is voluntarily applied for more than thirty days later by the debtor, and such application for insurance is a transaction separate and apart from the credit transaction, and is not a requirement of the creditor, and in the absence of a prior identifiable insurance charge to the debtor in the loan involved, a copy of such application or notice conforming to the rules of this Part shall be delivered to the debtor when executed.

(2) Every such application or notice of proposed insurance shall be signed by the debtor and shall set forth:

(A) the name and home office address of the insurer;

(B) the name and age of the debtor or debtors;

(C) the full amount of premium or the total identifiable insurance charge, if any, to the debtor, stated separately for credit life, credit accident and health insurance, and for any additional benefits, or, if appropriate, the method used for computing insurance charges from time to time;

(D) the amount of coverage;

(E) the effective date of insurance, if accepted by the insurer, and the termination date of insurance which shall not exceed more than fifteen (15) days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor;

(F) a brief description of the coverage applied for;

(G) a statement that upon acceptance of the insurance by the insurer and not later than forty (40) days after the date upon which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate to be delivered to the debtor, and that if the insurance is not accepted by the insurer, the debtor shall be notified within forty (40) days of any failure or delay in providing the insurance and any insurance charge made for such proposed insurance shall be fully refunded directly to the debtor; however, if such policy or certificate is not delivered as required or such notice is not timely given the insurer shall be deemed to have accepted the insurance;

(H) a space indicated as the space for required signature by the debtor;

(I) the amount of the debt;

(J) imprinted or stamped in not less than fourteen (14) point type letters, on the face thereof, in a prominent place, the words, "IMPORTANT! YOUR COVERAGE CAN BE DENIED IF ANY ANSWER TO THE ABOVE HEALTH QUESTIONS IS INACCURATE, MISTAKEN OR INCOMPLETE".

(3) If the insurance is provided in relation to a revolving charge account or a revolving loan account, 365:10-5-62(e)(2)(I) shall not apply.

(4) The copy of such application or notice of proposed insurance shall refer exclusively to insurance coverage and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required in (2) of this subsection appears in type of at least equal size and prominence as the other provisions of said statement of account instrument or agreement.

(5) Upon acceptance of the insurance by insurer and within forty (40) days of the date upon which the indebtedness was incurred, the insurer shall cause the individual policy or group certificate to be delivered to the debtor.

(f)Prohibited provisions. The policy or certificate of insurance shall not contain provisions which will encourage misrepresentations or are unjust, unfair, inequitable, misleading, deceptive, or contrary to law or to the public policy of this State.

(g)Termination of coverage.

(1) If the debtor is covered by a group credit insurance policy providing for the payment of single premium to the insurer, provision shall be made by the insurer that in the event of termination of the group policy for any reason, insurance coverage with respect to any debtor then insured under such policy shall be continued for the entire period for which the single premium has been paid, subject to the provisions of the policy relative to early termination of a debtor's insurance.

(2) If a debtor is covered by a group credit insurance policy providing for the payment of premiums to the insurer on a monthly outstanding balance basis, then the policy shall provide that, in the event of termination of such group policy for any reason, other than non-payment of premium, the insured debtor shall be given written notice that the coverage will continue for thirty (30) days from the date of such termination, except for replacement of the coverage by the same or another insurer in the same or greater amount takes place without interruption of the coverage and a new certificate reflecting such replacement coverage is delivered to such then insured debtor. The notice of termination required by this paragraph shall be given by the insurer or, at the option of the insurer by the creditor.

(h)Collection and remittance of financed premium. If the creditor adds identifiable insurance charges or premiums for credit insurance to the indebtedness, and any direct or indirect finance, carrying credit or service charge is made to the debtor on such insurance charges or premiums, the creditor must remit and the insurer shall collect on a single premium basis only for each debtor so insured. In any event, the charge to the debtor may not exceed the premium to be charged by the insurer.

Okla. Admin. Code § 365:10-5-62

Amended at 9 Ok Reg 2487, eff 6-26-92; Amended at 10 Ok Reg 3049, eff 10-1-93; Amended at 10 Ok Reg 4235, eff 10-1-93 (emergency); Amended at 11 Ok Reg 1847, eff 5-15-94; Amended at 13 Ok Reg 2669, eff 7-1-96