31.13.01.17

.17 Underwriting Requirements for Credit Health Prima Facie Premium Rates.

A. The prima facie premium rates in Regulation .15 of this chapter assume that contracts providing credit health insurance do not require evidence of individual insurability from any eligible debtor electing to purchase coverage within 30 days of the date the debtor becomes eligible.

B. If an insurer requires evidence of insurability from debtors electing to purchase coverage within 30 days of the date they become eligible and the total amount of insured periodic indemnity payable in event of disability of the debtor or the insurable maximum revolving credit account limit of an insured debtor does not exceed $15,000, the insurer shall reduce the premium rates stated in Regulation .15 of this chapter by 10 percent on all:

(1) Individual policies of credit health insurance issued through the same creditor; or

(2) Certificates of credit health insurance issued under the group policy through the same creditor.

C. Subject to the conditions and requirements of Regulations .08, .09, and .18 of this chapter, the maximum premium rates shall be the rates stated in Regulation .15 of this chapter if:

(1) The insurer requires evidence of insurability only from debtors whose total amount of insured periodic indemnity payable in the event of disability or insurable maximum revolving credit account limit exceeds $15,000; or

(2) The debtor elects to purchase coverage more than 30 days after the date the debtor became eligible:

D. For policies insuring open lines of credit, the insurer may require evidence of insurability for advances or for increases in the insured debtor's maximum revolving credit account limit which increase the insurable outstanding indebtedness or the debtor's insurable maximum revolving credit account limit over $15,000.

E. Regardless of individual policy or certificate amounts, the following underwriting assumptions apply:

(1) The policy contains no exclusions for preexisting conditions except conditions which, within 6 months before the effective date of the coverage, manifested themselves to the insured debtor by requiring medical consultation, diagnosis, or treatment, provided the preexisting conditions cause loss commencing within 6 months following the effective date of the coverage, and provided further that the preexisting conditions would ordinarily be expected to affect materially the health of the debtor during that period. Loss due to total disability shall include loss of time from work, and, in the case of persons not employed, the inability of the insured to engage in the insured's usual and customary activities. In the case of disability by reason of loss of time from work, total disability for which benefits may become due and payable shall be defined as "inability by reason of injury or sickness to substantially perform the duties pertaining to the insured's occupation" for at least the first 12 months for which a claim may be made, and after that may be defined as "inability to substantially perform the duties of any business or occupation for which the insured is reasonably fitted by education, training, and experience." Disability commencing 6 months or more after the effective date of the coverage may not be excluded regardless of whether the disability results from any preexisting condition. The policy shall provide that if the indebtedness covered by the policy results from the refinancing in whole or in part of a prior debt with the same creditor, the period of exclusion for preexisting conditions shall be reduced by the period that creditor-debtor disability coverage was in force in connection with the prior indebtedness. However, if the resulting period of exclusion for preexisting conditions is less than the period that would normally be applicable, and if, as a result, a claim for disability benefits which would not otherwise be allowed is payable, the benefits for the claim need not be greater than those which would have been paid under the prior coverage if it had not terminated.

(2) The policy contains no other exclusions except for disability resulting from pregnancy.

(3) There are no age restrictions, or, at the option of the insurer, the only age restrictions are those which make ineligible for coverage debtors who have reached age 65 at the time the indebtedness is incurred, or, alternately, debtors who will have reached age 69 on the scheduled maturity date of the indebtedness. On policies issued on the outstanding balance insurance basis in connection with open-end or revolving credit transactions, the policy may exclude from the classes eligible for insurance, debtors who have reached age 65, and provide for the termination of insurance or reduction in the amount of insurance upon the debtor's attaining a stated age not less than 65.

(4) Except as provided in this chapter, the policy contains no provision which excludes or restricts liability for disability caused in a certain specific manner or occurring while the insured debtor has a specified status.

(5) If an insurer acquires an existing account providing disability benefits on an outstanding balance basis or on another basis for which the debtor is charged monthly, the new insurer shall honor all claims for periods of disability commencing on or after the date of takeover and all claims after that which would have been paid under the former policy. The original insurer shall honor all claims for periods of disability commencing before the date of takeover.