31.13.01.22

.22 Prohibited Transactions.

A. A person may not solicit or sell a group or individual policy of credit life or credit health insurance unless the person is then licensed as an agent in accordance with Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland. A person possessing a restricted license in accordance with Insurance Article, §10-105(e)(2)(i), Annotated Code of Maryland, shall be deemed appropriately licensed for this purpose.

B. Enroller.

(1) An enroller may not receive any form of commission, compensation, remuneration, or other benefit based on the enrollee's activity in enrolling persons in group policies of credit life or credit health insurance.

(2) An enroller who is not also licensed as an agent may not engage in solicitation or selling or assist in solicitation or selling of an individual policy of credit life or credit health insurance.

C. Joint life credit insurance may not be issued on a consumer loan for an amount of less than $700.

D. Repealed.

E. Level term credit life insurance may not be written for a term exceeding 18 months unless written in combination with decreasing term credit life insurance in connection with a balloon loan.

F. Level term credit life insurance may not be written under group policies on loans repayable in installments unless:

(1) Written in combination with decreasing term credit life insurance in connection with balloon loans; and

(2) Limited to the balloon payment portion of balloon loans.

G. Disability Benefits.

(1) If credit health insurance is provided, disability benefits of the types stated in Regulation .14 of this chapter may not be issued to insure the same loan.

(2) This section does not prohibit the disability benefits coverage from being included in a policy or certificate of insurance covering a loan that is insured for credit health coverage as long as both coverages are not in force at the same time.

H. An insurer or agent may not engage in any of the following practices in connection with the solicitation or sale of credit life or credit health insurance as an inducement to the sale of the insurance, and each of these practices shall be considered an unfair trade practice in accordance with Insurance Article, Title 27, Annotated Code of Maryland:

(1) The offer or grant by an insurer or by any insurance agent to a creditor or to any person connected or affiliated with the creditor of any special advantage or any service not specified in the insurance contract.

(2) Agreement by an insurer or by an insurance agent to deposit with a bank or financial institution money or securities of the insurer or the agent with the design or intent that the deposit shall reduce or take the place of a deposit of money or securities which otherwise would be required of the creditor or an affiliate of the creditor by the bank or financial institution as a compensating balance or offsetting deposit for a loan or other advance.

(3) Allowing the creditor to retain premiums on credit life and credit health insurance on policies issued to the creditor or on policies sold or collected by the creditor for more than 60 days beyond the due date of the premiums. Premiums shall be remitted to the insurer within 60 days of their due dates and for purposes of these regulations, the deposit of premiums to any demand deposit account with the creditor or affiliate and the continued retention of the premiums in the deposit account for more than 60 days may not be deemed remittance to the insurer.

(4) Deposit with the creditor or an affiliate of the creditor by an insurer or by an insurance agent of money or securities without interest or at a lesser rate of interest than is generally being paid by the creditor bank or financial institution to other depositors of like amounts. This subsection may not be construed to prohibit the maintenance by an insurer or agent of demand deposits or premium deposit accounts which are reasonably necessary for use in the ordinary course of the insurer's or the agent's business.

I. If the beneficiary or the estate of a debtor or any other person makes payments on the loan after the death of the debtor, the insurer may not reduce the amount of credit life insurance payable which would otherwise have been payable on the date of the debtor's death.

J. If advance loan payments are made before the date of total disability of the debtor on a loan covered by single premium credit health insurance, or if the debtor or the beneficiary or any other person makes payments on a loan after the date the debtor is first entitled to receive a benefit for disability, the insurer may not reduce the amount of payments which were scheduled to be paid under the provisions of the credit health insurance policy because of these loan payments.

K. Accidental Death Benefit Coverage.

(1) If credit life insurance is provided, accidental death benefit coverage may not be issued to insure the same loan.

(2) This section does not prohibit accidental death benefit coverage from being included in a policy or certificate of insurance covering a loan that is insured for credit life coverage as long as both coverages as not in force at the same time.

L. Credit life insurance sold on the net payoff basis may not be written for an amount in excess of the scheduled principal indebtedness.