South Carolina § 38-85-40 - Loan transfer consolidations.

§ 38-85-40. Loan transfer consolidations.

The following provisions apply to loan transfer consolidations:

(1) An offer of new coverage must be made as soon as reasonably possible after the loan transfer. If an offer of new coverage is not made within thirty days after the loan transfer, or at least thirty days prior to the proposed effective date of the new coverage, the insurer shall notify the debtor, in writing, that he has the right to an unconditional refund of all premiums paid for the new coverage as long as he exercises that right, in writing, within thirty days from the date of the notification.

(2) In conjunction with the offer of new coverage, the new insurer shall disclose in writing to each debtor the following:

(a) that the insured debtor may have the right to continue or convert his old coverage by paying premiums directly to the old insurer;

(b) that the offer of new coverage is not conditioned upon either the termination or replacement of the old coverage;

(c) the name and address of the new insurer;

(d) the effective date of the new coverage;

(e) that the financial institution is the primary beneficiary of the new coverage;

(f) whether premium rates under the new plan are guaranteed;

(g) a description of the benefits provided under the new plan;

(h) that payment of the required premium constitutes acceptance of the new coverage.

(3) Disclosures required under this section may be made on behalf of the new insurer by the new servicer.

HISTORY: 1988 Act No. 382, SECTION 2.

SECTION 38-85-50. Additional requirements for insurer's participation in consolidations

No insurer may participate in any consolidation, including loan transfer consolidations, unless it complies with the following requirements:

(1) A group certificate must be delivered to each debtor insured under the new plan. The group certificate shall include the following information:

(a) the name or names of the single or joint insureds;

(b) identification of the insured mortgage;

(c) the amount of insurance under the new plan;

(d) the premium for the new coverage;

(e) the effective date of the new coverage;

(f) the beneficiary for the new coverage.

(2) A group certificate evidencing the new coverage may not include a contestability clause or, in the case of mortgage life insurance, a provision excluding suicide.

(3) The new coverage offered to the debtor must be the same type of coverage as the old coverage.

(4) Notwithstanding the provisions of Section 38-65-210, all group mortgage life insurance certificates shall include a conversion privilege permitting an insured debtor to convert, without evidence of insurability, to an individual policy of decreasing term insurance within thirty days of the date the insured debtor's group coverage is terminated for any reason other than the nonpayment of premiums. The initial amount of coverage under the individual policy must be an amount equal to the amount of coverage terminated under the group policy and must decrease over a term that corresponds with the scheduled term of the insured debtor's mortgage loan.

(5) Whenever the offer of coverage under the new plan is based on the same premium as charged under the old plan, all supplemental benefits provided by the old plan must be provided by the new plan.

HISTORY: 1988 Act No. 382, SECTION 2.