Section 0780-01-04-.07 - PREMIUM REFUNDS(1) Each individual policy of credit insurance on which the premium is paid by the debtor and each group certificate for which an identifiable charge is made to the debtor shall provide that, in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of Premium or identifiable charge due shall be paid or credited promptly to the debtor. If a debtor has paid a premium or an identifiable charge for credit insurance to the creditor and such insurance is declined by the insurer or otherwise does not become effective, the insurer or creditor shall immediately give written notice to such debtor and shall promptly arrange for refund or credit to the debtor of any premium or identifiable charge paid by him for such insurance plus interest and fees charged thereon.(2)(a) The refund of premiums or identifiable charges in the case of level-term credit life insurance and of reducing term credit life insurance on which premiums are payable other than by a single premium shall be equal to the pro-rata unearned gross premium, and in the case of reducing term credit life insurance paid by a single premium shall be equal to the amount computed by the "sum of digits" formula commonly known as the "Rule of 78", however, refunds calculated at less than one dollar ($1.00) need not be made. If 15 days or less of a loan month has been earned, no charge may be made, but if over 15 days, a full month may be charged.(b) Refunds or credits on credit accident and health insurance on which a premium or identifiable charge has been made on the single premium basis shall be at least equal to the amount computed by the "sum of digits" formula known as "Rule of 78", however, refunds calculated at less than one dollar ($1.00) need not be made.(c) The formulas to be used in computing the amount of the return premium shall be filed with and approved by the Commissioner.(3)(a) An insurer shall promptly refund to an individual policyholder and refund or credit to a group policyholder any refund of premium due on termination of insurance prior to the scheduled maturity date of the indebtedness, and a group policyholder or creditor shall promptly refund or credit to the debtor any refund due pursuant to this Rule. Insurers shall be responsible for establishment of procedures by which such refunds or credits are made.(b) "Termination of insurance" as used herein includes termination of credit accident and health coverage by the payment of the proceeds of credit life coverage and the extinguishment of the indebtedness.(4) In the event of termination of insurance by the payment of the proceeds of credit life coverage and the extinguishment of the indebtedness, the insurer shall not be obligated to make any refund developed under the provisions of this section if such refund is less than $3.00.Tenn. Comp. R. & Regs. 0780-01-04-.07
Original rule certified June 10, 1974.Authority: T.C.A. §§ 45-5-403, 56-7-901 and 56-8-110.