Section 0780-01-04-.05 - AMOUNT AND TERM OF CREDIT INSURANCE(1) The initial amount of credit life insurance issued in connection with a specific loan or other credit transaction shall not exceed the total amount repayable under the contract of indebtedness, which amount repayable under an agriculture or educational loan may include the amount of the loan commitment. The amount of credit life insurance issued as joint life coverage shall at no time exceed the scheduled or actual amount of unpaid indebtedness, whichever is greater.
(2) The initial amount of indemnity payable by credit accident and health insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness, and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments.(3) The term of any credit insurance shall, subject to acceptance by the insurer, if required, and unless otherwise permitted pursuant to paragraph (3) of Rule 0780-1-4-.04, commence on the date when the debtor becomes obligated to the creditor. Where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to such indebtedness, unless otherwise expressly authorized by the Commissioner, shall commence on the effective date of the policy. The term of an individual policy of credit insurance shall not extend more than fifteen (15) days beyond the scheduled maturity date of the indebtedness unless extended at no cost to the debtor. If insurance on the life of a debtor is provided under a group policy, the term of such insurance shall not be continued for a period greater than the duration of the indebtedness. Where evidence of insurability is required and such evidence is furnished more than thirty (30) days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurance company determines the evidence to be satisfactory, and in such event shall be an appropriate refund or adjustment of any charge to the debtor for insurance.(4) If the indebtedness is discharged due to prepayment, the insurance in force shall be terminated. If the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness. In all cases of termination prior to scheduled maturity, a refund shall be paid or credited as provided in Rule 0780-1-4-.07.(5) An individual policy of credit and health insurance by its terms shall not be cancellable by the insurer, except for nonpayment of premium, misrepresentation in any evidence of insurability under paragraph (4) of Rule 0780-1-4-.04 and misstatement of age under paragraph (6) of Rule 0780-1-4-.04 prior to (1) the scheduled maturity date of the indebtedness, or (2) the date on which the indebtedness is discharged due to prepayment, refinancing, or renewal, whichever is the earlier.Tenn. Comp. R. & Regs. 0780-01-04-.05
Original rule certified June 10, 1974.Authority: T.C.A. §§ 45-5-403, 56-7-901 and 56-8-110.