PURPOSE: This rule implements the prima facie rates for credit life and credit accident and health specified in section 385.070, RSMo. It also sets forth alternative conditions and rates which will be permitted for credit life insurance and credit accident and health insurance.

1. (1) Regarding credit life insurance—

   1. (A) It shall be presumed in any review of rates filed with the director that the benefits are reasonable in relation to the premium charged if the premium rates do not exceed the following:

      1. 1. Single premium rate—single life

decreasing term credit life insurance—fiftyfive cents (55¢) per annum per one hundred dollars ($100) of initial outstanding amount of insured indebtedness;

Rebecca McDowell Cook (4/30/98)*

1. 2. Single premium rate—single level

term credit life insurance—one dollar and ten cents ($1.10) per annum per one hundred dollars ($100) of initial outstanding amount of insured indebtedness;

1. 3. Monthly premiums—single life credit

life insurance—ninety-two cents (92¢) per one thousand dollars ($1000) of outstanding insured indebtedness;

1. 4. Single premium-joint life (two (2)

lives) decreasing term credit life insurance— ninety cents (90¢) per annum per one hundred dollars ($100) of initial outstanding amount of insured indebtedness; and

1. 5. Monthly premium—joint life (two (2)

lives) decreasing term credit insurance—one dollar thirty-eight cents ($1.38) per one thousand dollars ($1000) of outstanding indebtedness.

1. (B) If the credit life insurance policy is of a type different than those described in subsection (1)(A), premium rates for this policy shall be actuarially consistent with the rates set forth in subsection (1)(A);

2. (C) The presumption of reasonableness of premium rates stated in subsection (1)(A) is granted only when the credit life insurance contract—

   1. 1. Contains an incontestable clause for a

period which shall not be in excess of two (2) years; and

1. 2. Provides or offers coverage to all

debtors regardless of age, or to all debtors not older than the applicable age limit, which shall not be less than attained age of seventy (70) years if the limit applies to the age when the insurance attaches, or not less than attained age of seventy-one (71) years if the limit applies to the age on the scheduled maturity date of the debt. Age limits, if used, must be clearly shown on the individual policies or group certificates; and

1. (D) If the application for a credit life insurance contract or the insurer or its agents ask the applicant questions relating to the applicant’s health or medical condition, then the insurer shall reduce the premium rates deemed reasonable pursuant to section (1) of this rule by ten percent (10%).

1. (2) Regarding credit accident and sickness insurance—

   1. (A) Premium rates for credit accident and sickness insurance are presumed reasonable if consistent with the schedule stated in section 385.070.1(2), RSMo or, if premiums are paid on the basis of a premium rate per month per thousand dollars of outstanding insured indebtedness, if premium rates are computed according to the following formula, or according to a formula, approved by the 20 CSR 600-2

director which produces rates actuarially equivalent to the single premium rates:

= 20 Spn

Opn n+1

Where Spn = Single Premium Rate per $100 of initial insured indebtedness repayable in n equal monthly installments; Opn = Monthly Outstanding Balance Premium Rate per $1,000; and n = Original repayment period, in months.

1. (B) If the credit accident and sickness insurance contract does not contain any provision for a pre-existing condition, then the insurer may increase the premium rates deemed reasonable pursuant to subsection (2)(A) of this rule by no more than ten percent (10%); and
2. (C) If the application for a credit accident and sickness insurance contract or the insurer or its agents ask the applicant questions relating to the applicant’s health or medical condition, then the insurer shall reduce the premium rates deemed reasonable pursuant to subsection (2)(A) of this rule by ten percent (10%).

1. (3) An insurer may receive approval of a different premium rate in accordance with section 385.070.1(6), RSMo.
2. (4) Insurers may use the same application forms under this rule whether or not underwriting questions are asked pursuant to subsection (1)(D) or subsections (2)(B) and (2)(C). The department will presume that any application form for which all the relevant underwriting questions have been left unanswered represents a policy which has not been underwritten, and for which prima facie rates are permissible. A form for which any relevant underwriting questions have been answered or filled in represents a policy for which premium increases or decreases are required. Insurers should maintain in their files their rules for those circumstances where underwriting questions shall be asked. These rules shall be communicated to and followed by the insurer’s agents or other producers.

AUTHORITY: sections 374.045 and 385.045, RSMo 1986 and 385.070, RSMo Supp. 1992.* This rule was previously filed as 4 CSR 190-13.190. Original rule filed June 12, 1981, effective Oct. 16, 1981. Amended: Filed Nov. 2, 1993, effective July 10, 1994. *Original authority: 374.045, RSMo 1967; 385.045, RSMo 1977, amended 1981; and 385.070, RSMo 1977, amended 1983, 1991, 1992.