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(a) The prima facie rates for credit disability insurance with standard coverage written on the insured portion of a debt that is repayable in equal monthly installments and decreases uniformly by the amount of the monthly installments paid, are as follows:
(1) if premiums are payable on a single-premium basis, the prima facie rate per $100 of initial outstanding insured gross debt for single life credit disability insurance is as set out in the following table:
(2) if premiums are payable on the basis of a premium rate per month per $1,000 of outstanding insured gross debt, premiums must be computed according to the following formula:
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where OP n is the monthly outstanding balance premium rate per $1,000 of outstanding insured gross debt, SP n is the single premium rate per $100 of initial outstanding insured gross debt repayable in n equal monthly installments as shown in (1) of this subsection, and n is the number of months in the term of the insurance.
(b) If rates are applied to an amount other than the outstanding insured gross debt or benefits differ from those stated in (a) of this section, the rates must be adjusted to be actuarially consistent with the rates in (a) of this section.
(c) If the coverage provided is a constant maximum indemnity for a given period of time, the rates must be adjusted to be actuarially consistent with the rates in (a) of this section.
(d) If the coverage provided 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, each rate must be an appropriate combination of the premium rate
(1) in (c) of this section for a constant maximum indemnity for a given period of time; and
(2) in (a) of this section for a maximum indemnity that decreases in even amounts per month.
(e) The prima facie rates for credit disability insurance with standard coverage written on an open-end consumer credit basis with premiums payable on the basis of a premium rate per month, and with a monthly benefit equal to a constant percentage of the outstanding insured debt on the date of disability and a maximum benefit equal to the net debt on the date of disability, are determined by calculating the term of coverage as n equals 1.0 divided by the minimum payment percentage on the account and then applying n to the formula specified in (a)(2) of this section.
(f) If the rates in (e) of this section are applied to an amount other than the outstanding insured debt or benefits differ from those stated in (e) of this section, the rates must be adjusted to be actuarially consistent with the rates in (e) of this section.
(g) If the disability benefit is sold on a joint basis, the rate for the joint coverage must be two times the single rate.
History: Eff. 3/29/81, Register 77; am 6/6/93, Register 126; am 7/2/2001, Register 158
Authority: AS 21.06.090
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Last modified 7/05/2006