Rhode Island § 27-30-4 - Consumer Credit Insurance

§ 27-30-4. Amount of consumer credit insurance.

(a) Credit life insurance.

(1) The amount of credit life insurance shall at no time exceed the greater of the actual net debt or the scheduled net debt.

(2) If the coverage is written on the actual net debt, then the amount payable at the time of loss may not be less than the actual net debt less 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 the scheduled net debt, then the scheduled net debt;

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

(iii) If the actual net debt is greater than the scheduled net 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 basis and is based on the actual net debt, then the amount payable at the time of loss shall be the actual net debt on the date of death. When such premium is computed on the basis of a balance that does not include accrued past-due interest, then the amount payable at the time of loss shall not be less than the actual net debt less any accrued interest more than two (2) months past due.

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

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

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

(i) The amount of insurance may be the lesser of a stated level amount and the amount determined by subdivision (a)(2);

(ii) The amount of insurance may be the lesser of a stated level amount and the amount determined by subdivision (a)(3);

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

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

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

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

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

(8) Other patterns of insurance may be used that are not inconsistent with the rest of this subsection (a).

(b) Credit accident and health insurance and consumer credit unemployment insurance.

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

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