1. (a) Generally. This Article does not supersede any other statutes or regulations pertaining to the use of particular types of forms in certain circumstances. (For example, only group forms may be used by credit unions.)

   The standard forms set forth below reflect 30 day elimination period coverage, but any other permissible coverage may be substituted. The designation of the coverage may be preprinted or filled in later. Terms, such as “borrower”, “creditor”, “loan” and “advance”, appearing in the standard forms may be varied, provided that such variance is required by the circumstances of use and that the substituted terms are consistent and not misleading. Age “66” may be substituted for “65” where it appears in the standard forms. Forms with ages other than those set forth in these regulations must be submitted for approval on a non-standard basis pursuant to § 2249.2(d).

   Standard and non-standard forms shall be printed in type which complies with the standard of Insurance Code Section 10320(d).

   Where debtors may elect among several coverage, insurers may use forms which provide all the coverage offered. However, forms showing coverage which are not available to the debtors to be covered may not be used.

2. (b) Drafting Instructions for Individual Policies and Group Certificates. Standard policy and certificate forms shall be assembled from the blocks of text set forth in Sections 2249.10 through 2249.12 of this Article as follows:

   1. (1) Select the appropriate Identification Number for the desired coverage from the Identification Number Chart in Section 2249.7 of this Article. (Note that the Identification Number refers to the coverage provided rather than to the type of document.)
   2. (2) Depending upon whether an individual policy or a group certificate is being drafted, enter the appropriate List of Block Numbers for Each Identification Number (Section 2249.8 or 2249.9 of this Article) with the selected Identification Number. The sequence of text blocks is indicated by the block numbers following each Identification Number.
   3. (3) An illustrative sample Identification Number 11 Certificate is set forth in Section 2249.14 of this Article.
3. (c) Schedules. Schedule blocks may appear in any sequence which is not misleading or confusing. The reference to maximum benefits in the schedule may be deleted if benefits are not subject to a maximum. Additional schedule items may be added to the schedule if the net effect of such additions is not confusing or misleading. Schedule blocks specified for each policy or certificate must not be deleted. The insurer must be able to identify the seller of any particular policy or certificate by means of the designation “Source Code.” Every policy or certificate must indicate the rate class by means of the designation of “Class of Business.”

4. (d) Applications. The following text may be inserted in applications:

   “I want insurance.__________

   I do not want insurance.__________”

   “You understand you do not have to buy this insurance to get your loan approved.”

   The medical application, Application Block AP 20, or any portion thereof, may be used with any form. The numbered paragraphs in the non-medical application for the type of coverage being applied for should be substituted for paragraphs 2 through 4 in the subscription agreement AP 20 when they differ from the AP 20 text. For applications to be used with ID forms 18 through 22 and 25 through 29, also replace the sentence, “You are applying for the credit insurance marked above.”, in AP 20, with the following: “You are applying for the credit insurance marked above and authorizing the Creditor to add the charges for insurance to your loan each month as they become due. You have the right to stop this authorization. Retain the second standard sentence, “You should understand that ... cancel your insurance protection.” The medical application may be formatted so that questions apply separately to co-borrowers.

   “Date of Birth” may be substituted for “age” in the signature blanks in the applications.

   The phrase “(Refer to “Total Disabilities Not Covered” in your policy for details.)” shall be changed to “(Refer to the Notice of Proposed Insurance for details.)” in applications which are used with Notice of Proposed Insurance.

5. (e) Policy and Certificate Blocks. The sequence of these blocks must not vary from that set forth in Sections 2249.8 and 2249.9 of this Article.

   Policies or certificates which include disability coverage and which are not printed on the same document as the application shall contain the following text on the front page:

   “DISABILITY INSURANCE MAY NOT COVER CONDITIONS FOR WHICH YOU HAVE SEEN A DOCTOR OR A CHIROPRACTOR IN THE LAST SIX MONTHS. (Refer to “Total Disabilities Not Covered” in this policy for details.)”

6. (f) Dividend Provision. The following text may be inserted in an appropriate location where required by law:

   “Our Board of Directors will determine annually whether a dividend will be paid on this policy.”

7. (g) Block Numbers. Block numbers shall not appear on forms drafted in accordance with this Article.
8. (h) Notices of Proposed Insurance. The standard Notices of Proposed Insurance shall be assembled from the Notice of Proposed Insurance blocks set forth in Section 2249.13 in the same manner as the standard policies and certificates. The Notice of Proposed Insurance block sequences are listed following “NOPI:” in Section 2249.9. (Notices of Proposed insurance are the same for individual policies and group certificates.) The wording “policy or certificate” may be changed to refer only to “policy” or only to “certificate” if desired.
9. (i) Form Numbers and Identification Numbers. All forms drafted in accordance with this Article shall be identified by a form number in the lower left corner of the front of the document. Such forms shall indicate the Identification Number of the coverage provided in the lower right corner of the page upon which the form number appears, except for those forms which do not reflect a specific coverage or coverage.
10. (j) Group Master Policies. Group master policies may be brought into conformity with this Article by adding an amendatory endorsement to the effect of “Policy __________ is hereby amended to provide coverage exactly as described in Certificate(s) __________ attached.”

11. (k) Partial Payoff. Forms covering only a portion of a loan which exceeds the insurer's maximum benefit levels must include the paragraph captioned “Partial Payoff” as set out below. The paragraph referring to life insurance may be eliminated if only disability insurance is provided, and the paragraph referring to disability insurance may be eliminated if only life insurance is provided. The “Partial Payoff” paragraph must be the final paragraph in the section titled “WHAT WE WON'T PAY.”

    Partial Payoff

    If the Original Amount of Life Insurance shown in the Schedule is less than the original amount of your debt, the life insurance benefit may not completely pay off your debt. See the paragraph titled “Amount of Life Insurance” to calculate the partial payoff.

    If the Monthly Total Disability Benefit shown in the Schedule is less than your Monthly Loan Payment, you will have to pay the creditor the difference each month to keep your loan from being delinquent.

    In addition, the face page of the policy or certificate must have a prominent overprint or provision reading: “Warning: This insurance may not be enough to completely pay off your loan.” Also, “We will not pay more than the Maximum Amount of Life Insurance in the Schedule,” shall be added to the end of the Amount of Life Insurance provision, as appropriate.

    The “Partial Payoff” provision may not be used with Identification Numbers 6 through 10.

    Forms which use any other system for partial coverage must be submitted for approval pursuant to Section 2249.2 of this Article.

12. (l) Credit Union Open End and Credit Card Coverages.

    1. (1) Forms providing life insurance coverage on Credit Union Open End loans, as defined in § 2248.31, may use Policy and Certificate Block PC 3 in lieu of Block PE 3.
    2. (2) Forms providing disability coverage on “credit cards” subject to Ins. C. § 779.30(f) shall use Policy and Certificate Block PJ 1 in lieu of Block PJ 2. Notices of Proposed Insurance, if any, shall use Notice of Proposed Insurance Block C-1 in lieu of Block C-3.

13. (m) “Critical period” disability coverage may be provided by substituting Text Block PF 4 for Text Block PF 1 from Section 2249.12 and adding Schedule Block SC 37 from Section 2249.10. Where such coverage is provided, a Partial Payoff paragraph and warning overprint shall be used pursuant to subsection (k). The Partial Payoff disability paragraph shall be replaced with:

    “If the remaining term of your loan exceeds the Maximum Disability Benefit Period in the Schedule when you become disabled, you will have to resume payments to the Creditor after the Maximum Disability Benefit Period ends.”

    If a Notice of Proposed Insurance is used, Notice of Proposed Insurance Block C-4 shall be substituted for Notice of Proposed Insurance Block C-1.

14. (n) Joint disability coverage may be provided for as follows:

    1. (1) Add the sentence, “If you are insured for joint disability, only one Monthly Total Disability Benefit will be paid for any month in which you are both disabled,” to the end of the appropriate standard Total Disability Insurance Benefit text block. If a Notice of Proposed Insurance is used, also insert the quoted sentence immediately before “We won't pay the claim if your disability:”, in the Notice provision commencing with, “If you are insured for total disability ...”
    2. (2) Delete the sentence, “Only the Primary Borrower is eligible for disability insurance,” from the application.
    3. (3) For single premium forms, use Schedule Block SC 38 in place of Schedule Block SC 15; for monthly premium forms, use Schedule Blocks SC 39 and SC 40 in place of Schedule Blocks SC 29 and SC 30.

15. (o) Standard language is not provided in these regulations for:

    1. (1) Life insurance subject to pre-existing conditions limitations. Such coverages must be provided by non-standard forms approved by the Commissioner pursuant to § 2249.2.
    2. (2) Life and health insurance guarantee association summary documents required by Insurance Code § 1067.17. Such documents are exempt from filing under these regulations.
    3. (3) Notices of information practices which may be required by Ins. C. § 791.04. Such notices are exempt from filing under these regulations.
16. (p) Consumer Contact Notices. Either the reference to the Creditor Beneficiary or the reference to the insurer may be omitted from the Department of Insurance consumer contact notice in Policy and Certificate Blocks PA 1 through PA 4 and in Notice of Proposed Insurance Blocks D-1 and D-2. A Creditor Beneficiary shall be referred to in the consumer contact notice if it is a licensed insurance agent that delivers individual policies or certificates to debtors. If a Creditor Beneficiary is referred to in the consumer contact notice, then its address and telephone number must appear in the Creditor Beneficiary Schedule Block or be included in the consumer contact notice.

Note: Authority cited: Sections 779.21 and 779.27, Insurance Code. Reference: Sections 510, 779.4 779.10, 779.12a, 779.14, 779.18, 779.27-779.31, 10113, 10113.5, 10203.5, 10203.55, 10207, 10208, 10209, 10270.505, 10270.94 and 10291, Insurance Code; and Sections 18290-18292, 22314, 22315 and 22455, Financial Code.

History

1. New subsection (1) filed 12-29-78; designated effective 4-1-79 (Register 79, No. 2).

2. Amendment of subsections (a),(d),(h),(k) and (1), and new subsection (m) filed 7-25-83; effective thirtieth day thereafter (Register 83, No. 31).

3. Amendment of subsections (d) and (e) filed 5-23-85; effective thirtieth day thereafter (Register 85, No. 21).

4. Editorial correction of subsection (d) (Register 2006, No. 32).

5. Editorial correction of subsection (c) (Register 2006, No. 40).

6. Amendment of section and repealer and new Note filed 10-2-2006; operative 11-1-2006 (Register 2006, No. 40).