HAR §16-6-12. Credit disability insurance premium rates

(a) If premiums are paid in one sum for the entire duration of the indebtedness, the rates for $100 of initial insured indebtedness repayable in equal installments as shown in the exhibit entitled "Credit Disability Insurance Premium Rates," dated July 1, 1988, located at the end of this chapter and which is made a part of this section, shall be deemed reasonable in relation to the benefits provided. Premium rates for all indebtedness repayable in installments shall be consistent with the rates in the exhibit entitled "Credit Disability Insurance Premium Rates," dated July 1, 1988, located at the end of this chapter. (b) If premiums are paid on the basis of a premium per month per $1,000 of outstanding indebtedness, these premiums shall be computed according to the following formula: Opn = 20 SPn n+1 where SPn = Single premium rate per $100 of initial insured indebtedness repayable in n equal monthly installments. 6-6 §16-6-12 Opn = Monthly outstanding balance premium rate per $1,000. n = Original repayment period in months. (c) The actuarial equivalent of sections 16-6-11 and 16-6-12 if the coverage provided is a constant maximum indemnity for a given period of time. (d) An appropriate combination of the premium rate for a constant maximum indemnity for a given period of time and the premium rate for a maximum indemnity which decreases in even amounts per month, if the coverage period is a combination of a constant maximum indemnity for a given period of time after which the maximum indemnity begins to decrease in even amounts per month. (e) The actuarial equivalent of the rates in subsections (a), (b), (c) and (d) if the benefits provided are other than those described in these four subsections. (f) The outstanding balance rate for credit disability insurance, unlike credit life insurance, varies by term (months). Because of this, it is difficult or impossible to compute a single maximum outstanding balance rate applicable to all loans made under an open-end or revolving credit plan. If the term of the loan is clearly defined, an appropriate rate or rates can be computed. However, this is not the case in most revolving credit situations. (g) The premium rates specified in the table at the end of this chapter are considered reasonable for policies which: (1) Do not contain any exclusions except disabilities resulting from intentional self-inflicted injury, pregnancy, foreign residence, flights in non-scheduled aircraft, and pre-existing illness, disease or physical condition for which the debtor received or was professionally advised to obtain medical advice, consultations or treatment during the six-month period preceding the effective date of the debtor’s coverage and which caused disabilities within the six months following the effective date of coverage. (2) Do not contain any age restrictions, or only age restrictions making ineligible for coverage those debtors sixty-five or over at the time the indebtedness is incurred, or debtors who will have attained age sixty-six or over on the maturity date of the indebtedness. (3) May condition coverage on the debtor’s being in active employment at the time the indebtedness is incurred. (4) Provide for a daily benefit equal in amount to one-thirtieth of the scheduled monthly payments on the indebtedness. 6-7 §16-6-12 (5) Contain a definition of "disability" which provides coverage during the initial twelve months of disability even though the insured is able to perform an occupation other than the one he held at the time disability occurred, except this paragraph shall not apply to lump sum disability coverage. (h) If any insurer files for approval any forms providing coverage more restrictive than that described in subsection (g) the insurer shall demonstrate to the satisfaction of the insurance commissioner that the premium rates to be charged for such restricted coverage will produce a loss ratio not less than the contemplated for standard coverage at the premium rates described in subsections (a), (b), (c), (d), (e) and (f). [Eff 6/22/81; am and comp 12/16/88] (Auth: HRS §§431:2-201, 431:10B-113) (Imp: HRS §§431:10B-108, 431:10B-109)