§ 27-30-4 - Amount of consumer credit insurance. - Rhode Island Statutes

SECTION 27-30-4

   § 27-30-4  Amount of consumer creditinsurance. – (1) The amount of credit life insurance shall at no time exceed the greater ofthe actual net debt or the scheduled net debt.

   (2) If the coverage is written on the actual net debt, thenthe amount payable at the time of loss may not be less than the actual net debtless any payments more than two (2) months overdue.

   (3) If the coverage is written on the scheduled net debt,then the amount payable at the time of loss shall be:

   (i) If the actual net debt is less than or equal to thescheduled net debt, then the scheduled net debt;

   (ii) If the actual net debt is greater than the scheduled netdebt but less than or equal to the scheduled net debt plus two (2) months ofpayments, the actual net debt; or

   (iii) If the actual net debt is greater than the schedulednet debt plus two (2) months of payments, then scheduled net debt plus two (2)months of payments.

   (4) If a premium is assessed to the debtor on a monthly basisand is based on the actual net debt, then the amount payable at the time ofloss shall be the actual net debt on the date of death. When such premium iscomputed on the basis of a balance which does not include accrued past dueinterest, then the amount payable at the time of loss shall not be less thanthe actual net debt less any accrued interest more than two (2) months past due.

   (5) Notwithstanding the provisions of subdivision (1) of thissubsection, insurance on agricultural loan commitments, not exceeding one yearin duration, may be written up to the amount of the loan commitment, on anon-decreasing or level term plan.

   (6) Notwithstanding the provisions of subdivision (1) of thissubsection, insurance on educational loan commitments may be written for netunpaid indebtedness plus any unused commitment.

   (7) Coverage may be written for less than the net debt by thefollowing methods:

   (i) The amount of insurance may be the lesser of a statedlevel amount and the amount determined by subdivision (2) of this subsection;

   (ii) The amount of insurance may be the lesser of a statedlevel amount and the amount determined by subdivision (3) of this subsection;

   (iii) The amount of insurance may be a constant percentage ofthe amount determined by subdivision (2) of this subsection;

   (iv) The amount of insurance may be a constant percentage ofthe amount determined by subdivision (3) of this subsection; or

   (v) In the absence of any preexisting condition exclusions,the amount of insurance payable in the event of death due to natural causes maybe limited to the balance as it existed six (6) months prior to the date ofdeath if:

   (A) There has been one or more increase in the outstandingbalance during the six (6) month period, other than those due to the accrual ofinterest or late charges; and

   (B) Evidence of individual insurability has not been requiredduring the six (6) month period.

   (8) Other patterns of insurance may be used which are notinconsistent with the rest of this subsection.

   (1) The total amount of periodic indemnity payable by creditaccident and health insurance or credit unemployment insurance in the event ofdisability or unemployment, as defined in the policy, shall not exceed theaggregate of the periodic scheduled unpaid installments of the gross debt; andthe amount of each periodic indemnity payment shall not exceed the originalgross debt divided by the number of periodic installments.

   (2) Notwithstanding the provisions of subdivision (1) of thissubsection, for credit accident and health insurance or credit unemploymentinsurance written in connection with an open-end credit agreement, the amountof insurance shall not exceed the gross debt which would accrue on that amountusing the periodic indemnity. Subject to any policy maximum, the periodicindemnity must not be less than the creditor's minimum repayment schedule.