CREDIT LIFE & DISABILITY (ACCIDENT AND HEALTH) INSURANCE

DEBTOR HAVE THE RIGHT TO KNOW:

- ALL CREDIT INSURANCE PLANS THAT A CONSUMER IS ELIGIBLE TO PURCHASE. - THE COST OF EACH INSURANCE PLAN - THE CONSUMER'S RIGHT TO CANCEL THE POLICY WITHIN 30 DAYS - THE CONSUMERS RIGHT TO PROVIDE ALTERNATIVE COVERAGE, EITHER THROUGH AN EXISTING POLICY OR NEWLY- PURCHASED PLAN

PRIMA FACIES RATE

- ARE PREMIUM RATES THE STATE OF WASHINGTON HAS PRE-APPROVED. - THE INSURANCE COMPANY MAY US PRIMA FACIES RATE WITHOUT FILING ADDITIONAL ACTUARIAL SUPPORT.

EXCLUSIONS

- CREDIT ACCIDENT AND HEALTH INSURANCE POLICIES MAY ELECT TO INCLUDE AGE RESTRICTION ON PEOPLE 66 OR OLDER AND MAY END WHEN A PERSON REACHES AGE 66. - THE INSURANCE MAY EXCLUDE BENEFITS FOR DISABILITIES THAT RESULT FROM ELECTIVE SURGERY OR PREEXISTING CONDITIONS THAT BEGIN AT LEAST 6 MONTHS BEFORE THE EFFECTIVE DATE. - EXCLUDED CAN BE INJURIES OR DEATH DUE TO SUICIDE WITHIN 1 YEAR, WAR OR ANY ACT OF WAR, INTENTIONALLY SELF-INFLICTED INJURY, OR FROM FLIGHT IN ANY AIRCRAFT OTHER THAN A COMMERCIAL SCHEDULED AIRCRAFT. *ALL PREMIUMS PAID ARE REFUNDED (NO INTEREST IS REQUIRED) IF A CLAIM IS DENIED OR A POLICY IS CANCELED DURING THE FIRST 2 YEARS.*

CREDIT ACCIDENT AND HEALTH (Credit Disability Insurance)

- CREDIT ACCIDENT AND HEALTH PAYS A LIMITED NUMBER OF MONTHLY PAYMENTS ON A SPECIFIC LOAN IF YOU BECOME ILL OR INJURED AND CANNOT WORK DURING THE TERM OF COVERAGE.

OBLIGATION THAT AN INSURER HAS TO SUPERVISE CONSUMER CREDIT OPERATIONS:

- EACH INSURER MUST PERIODICALLY CONDUCT A COMPLETE REVIEW OF CREDITORS, - MAINTAIN WRITTEN RECORDS OF THE REVIEWS FOR AT LEAST 3 YEARS, - MAINTAIN A LIST OF ALL LICENSED INDIVIDUALS WHO HAVE SOLD OR BEEN COMPENSATED FOR THE SALE OF CONSUMER CREDIT INSURANCE.

PROCEDURES FOR TERMINATION

- IF THE INDEBTEDNESS IS DISCHARGED DUE TO RENEWAL OR REFINANCING PRIOR TO THE SCHEDULED MATURITY DATE, THE INSURANCE IN FORCE MUST BE TERMINATED BEFORE ANY NEW INSURANCE MAY BE ISSUED IN CONNECTION WITH RENEWED OR REFINANCED INDEBTEDNESS. - IN ALL CASES OF TERMINATION PRIOR TO SCHEDULED MATURITY, A REFUND WILL BE PAID OR CREDITED.

CREDIBILITY TABLE

- IS USED FOR PURPOSES OF THE STANDARD CASE RATING PROCEDURE. - AN INSURER MAY FILE RATES THAT ARE EQUIVALENT TO THE PRIMA FACIE RATES AND USE THOSE RATES WITHOUT FURTHER PROOF OF THEIR REASONABLENESS. - AN INSURER MUST FILE RATES AND SUPPORTING ACTUARIAL DOCUMENTATION IF IT PROPOSES POLICY PROVISIONS MORE RESTRICTIVE THAN THOSE ALLOWED FOR PRIMA FACIE RATES OR RATES HIGHER THAN THOSE DEVELOPMENT ACCORDING TO THE STANDARD CASE RATING PROCEDURE.

CREDIT CASUALTY LICENSE

- ISSUED TO PEOPLE OR COMPANIES WHO SELL INSURANCE COVERING MORTGAGE PROPERTY (SUCH AS MOTOR VEHICLE) - ALSO KNOWN AS "COLLATERAL PROTECTION COVERAGE" OR "VENDOR SINGLE-INTEREST" INSURANCE. - TO GET THIS LICENSE, AN INDIVIDUAL MUST PASS THE CREDIT CASUALTY EXAM.

Involuntary Unemployment Insurance

- IT PAYS A SPECIFIED NUMBER OF MONTHLY LOAN PAYMENTS IF YOU LOSS YOUR JOB DUE To NO FULT OF YOUR OWN, SUCH AS A LAYOFF, DURING THE TERM OF COVERAGE.

THE INSURANCE COMMISSIONER

- PROTECTS THE INSURANCE CONSUMER BY ENFORCING THESE LAWS. - COMMISSIONER DOES NOT WRIGHT THESE LAWS BUT HE DOES WRITE REASONABLE RULES TO BE ABLE TO PROPERLY CLARIFY THESE LAWS AND ENFORCE THEM. - THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) IS THE OLDEST ASSOCIATE OF THE STATE GOVERNMENT OFFICIAL. THEY PROTECT INSURANCE CONSUMERS. - COMMISSIONER IS ELECTED EVERY 4 YEARS BY THE VOTERS OF THE STATE OF WA. (WA CURRENT COMMISSIONER IS MIKE KREIDLER).

CREDIT TRANSACTION

- REPAY MONEY LOANED - PAY FOR LOAN COMMITMENT MADE - PAY FOR GOODS, SERVICES, OR PROPERTY SOLD OR LEASE

COMPETENT PARTIES

- THE INSURED MUST BE OF LEGAL AGE (18 AND OLDER) - NOT UNDER THE INFLUENCE OF INTOXICATING -NOT BE MENTALLY HANDICAPPED. THE CONSENT MUST BE FREELY GIVEN IN ORDER TO ENTER INTO THE CONTRACT THE MEANING OF THE CONTRACT MUST BE CERTAIN.

THE CONSUMER'S RIGHTS WHEN THE POLICY ENDS

- THE INSURER MUST CONTINUE COVERAGE FOR THE ENTIRE PERIOD FOR WHICH A PREMIUM HAS BEEN PAID IF THE POLICY PROVIDES FOR SINGLE PREMIUM PAYMENTS OR PREMIUM PAYMENTS THAT PREPAY COVERAGE BEYOND ONE MONTH. - THE INSURER MUST PROVE A TERMINATION NOTICE TO THE INSURED DEBTOR A LEAST 30 DAYS BEFORE COVERAGE ENDS. - IF THE POLICY PROVIDES FOR MONTHLY PREMIUM PAYMENTS, THE INSURER DOES NOT HAVE TO PROVIDE TERMINATION NOTICE IF THE DEBTOR OBTAINS EQUIVALENT COVERAGE AND NO LAPSE OF COVERAGE OCCURS. - FOR COVERAGE ON REFINANCED DEBTS, ALL EXCLUSION AND POLICY LIMITATIONS WILL APPLY AS OF THE FIRST DATE THAT THE DEBTOR FIRST BECOMES INSURED FOR THE ORIGINAL DEBT.

PURPOSE OF REGULATIONS RELATING TO CREDIT INSURANCE WAC 284-34-100 THROUGH 284-34-260

- TO PROTECT DEBTORS AND THE PUBLIC BY ESTABLISHING A SYSTEM OF RATES, POLICY FORMS, AND OPERATING STANDARDS FOR THE TRANSACTION OF CONSUMER CREDIT INSURANCE - THIS REGULATION INTERPRETS AND IMPLEMENTS THE SECTIONS OF TITLE 48RCW THAT APPLY TO CONSUMER CREDIT INSURANCE.

DEFINITION OF DISABILITY:

1. FOR THE FIRST 24 MONTHS OF DISABILITY: TOTAL DISABILITY MEANS THE INABILITY OF THE INSURED TO PERFORM THE ESSENTIAL FUNCTIONS OF THE DEBTOR'S OWN OCCUPATION. 2. AFTER 24 MONTHS: DISABILITY MEANS THE INABILITY OF THE INSURED TO PERFORM THE ESSENTIAL FUNCTIONS OF ANY OCCUPATION FOR WHICH THE DEBTOR IS REASONABLY SUITED DUE TO EDUCATION, TRAINING, OR EXPERIENCE.

THE OBLIGATION OF INSURERS:

1. IF THE CREDITOR ADDS INSURANCE CHARGES OR PREMIUMS TO THE DEBT, THE INSURER MUST COLLECT THE PREMIUM OR CHARGES WITHIN 60 DAYS AFTER IT IS ADDED TO THE DEBT. 2. IF THE DEBTOR REFINANCES AND PAYS OFF THE DEBT BEFORE THE SCHEDULED MATURITY DATE, THE INSURER MUST TERMINATE EXISTING INSURANCE BEFORE ANY NEW INSURANCE MAY BE ISSUED TO PROVIDE COVERAGE FOR THE REFINANCED DEBT. 3. IF INSURANCE COVERAGE ENDS DUE TO PREPAYMENT BEFORE THE SCHEDULED MATURITY DATE, THE INSURER MUST TERMINATE COVERAGE AND REFUND ALL UNEARNED INSURANCE OR PREMIUM CHARGES AND CAUSE THAT AMOUNT TO BE PAID OR CREDITED TO THE DEBTOR. EXCEPTION: THE INSURER DOES NOT HAVE TO REFUND INSURANCE CHARGES OR PREMIUMS FOR ANY COVERAGE OR BENEFITS PAID UNDER WHICH A LUMP SUM INSURANCE (LIFE INSURANCE) OR FOR BENEFITS PAID UNDER WHICH CREDIT ACCIDENT AND HEALTH INSURANCE.

3 BASIS FOR PREMIUM FACIE RATES

1. MONTHLY OUTSTANDING BALANCE BASIS 2. SINGLE PREMIUM BASIS 3. ALTERNATIVE COMPANY OPTION **INSURERS MUST PROVIDE CONSUMER CREDIT INSURANCE BENEFITS THAT ARE REASONABLE IN RELATION TO THE PREMIUM CHARGED. THESE RATES ALLOW 60% OF THE PREMIUM FOR BENEFITS ON ONE DEBTOR AND 40% OF THE PREMIUM FOR EXPENSES AND PROFIT.**

AN INSURANCE COMPANY MUST NOT

1. OFFER OR GRANT TO A CREDITOR ANY SPECIAL ADVANTAGE OR SERVICE THAT IS NOT INCLUDED IN EITHER THE GROUP INSURANCE CONTRACT OR IN THE AGENCY CONTRACT. 2. AGREE TO DEPOSIT WITH A BANK OR FINANCIAL INSTITUTION MONEY OR SECURITIES OF THE INSURER WITH THE DESIGN OR INTENT THAT THE DEPOSIT WILL AFFECT OR REPLACE A DEPOSIT OF MONEY OR SECURITIES THAT OTHERWISE WOULD BE REQUIRED OF THE CREDITOR BY THE BANK OR FINANCIAL INSTITUTION AS A COMPENSATING BALANCE OR OFFSETTING DEPOSIT FOR A LOAN OR OTHER ADVANCEMENT. 3. DEPOSIT MONEY WITHOUT INTEREST OR AT A LESSER RATE OF INTEREST THAN IS CURRENTLY BEING PAID BY THE CREDITOR, TO OTHER DEPOSITORS OF LIKE AMOUNTS FOR SIMILAR DURATIONS.

THE MANDATORY BENEFITS THAT APPLY TO PRIMA FACIE CREDIT LIFE INSURANCE RATES:

1. SUICIDE: AN INSURER MAY EXCLUDE COVERAGE FOR SUICIDE OCCURRING WITHIN 1 YEAR AFTER THE EFFECTIVE DATE OF COVERAGE. 2. INSURERS MAY ELECT TO INCLUDE AGE RESTRICTIONS IN THEIR CERTIFICATES OR POLICIES, SUBJECT TO THE FOLLOWING CONDITIONS: - AN AGE RESTRICTION MAY SAY THAT "NO INSURANCE WILL BECOME EFFECTIVE ON DEBTORS WHO ARE AGE 66 OR OLDER." - AN AGE RESTRICTION MAY SAY THAT "INSURANCE WILL END WHEN THE BEDOTR BECOMES AGE 66." - INSURANCE COVERAGE MUST CONTINUE UNTIL THE END OF THE PERIOD FOR WHICH A PREMIUM PAYMENT OR CHARGE IS MADE.

IN FORMATION THAT MUST BE DISCLOSE TO DEBTOR:

1. THE DEBTOR DOES NOT HAVE TO BUY CONSUMER CREDIT INSURANCE TO OBTAIN CREDIT APPROVAL 2. THE DEBTOR HAS THE RIGHT TO PROVIDE ALTERNATIVE COVERAGE, EITHER THROUGH AN EXISTING POLICY OR A NEWLY-PURCHASED PLAN. 3. ALL CREDIT INSURANCE PLAN THAT A CONSUMER IS ELIGIBLE FOR PURCHASES 4. THE INSURER MAY DECIDE TO DENY COVERAGE. THIS STATEMENT MUST LIST FACTORS THAT MAY CAUSE THE INSURER TO DENY OR LIMIT COVERAGE. 5. THE DEBTOR MAY CANCEL COVERAGE AT ANY TIME DURING THE TERM OF THE LOAN.

THE 2 PRINCIPAL CHARACTERISTIC OF TERM LIFE INSURANCE

1. THE INSURED MUST DIE FOR ANY PAYMENT TO BE MADE 2. AT THE END OF THE TERM, THE CONTRACT EXPIRED. AS YOU AGE THOUGH, THE COST GOES UP ACCORDINGLY SO IT CAN BE unaffordable AT THE AGE OF 65. - TERM POLICY CAN BE ANNUALLY RENEWED, 5-YEAR TERM, 10-YEAR TEARM, ETC.

THE CONSUMER'S (DEBTOR'S) RIGHT WHEN THE POLICY ENDS:

1. THE INSURER MUST CONTINUE COVERAGE FOR THE ENTIRE PERIOD FOR WHICH A PREMIUM HAS BEEN PAID IF THE POLICY PROVIDES FOR SINGLE PREMIUM PAYMENTS OF PREMIUM PAYMENT THAT PREPAY COVERAGE BEYOND 1 MONTH. - THE INSURER MUST PROVIDE TERMINATION NOTICE TO THE INSURED DEBTOR AT LEAST 30 DAYS BEFORE COVERAGE END. 2. IF THE POLICY PROVIDES FOR MONTHLY PREMIUM PAYMENTS, THE INSURER DOES NOT HAVE TO PROVIDE TERMINATION NOTICE IF THE DEBTOR OBTAINS EQUIVALENT COVERAGE AND NO LAPSE OF COVERAGE OCCURS. 3. FOR COVERAGE ON REFINANCED DEBT, ALL EXCLUSION AND POLICY LIMITATIONS WILL APPLY AS OF THE 1ST DATE THAT THE DEBTOR FIRST BECOMES INSURED FOR THE ORIGINAL DEBT.

Fraud and False Statements (18 USC SECTION 1033 AND 1034) A.K.A. THE VIOLATION CRIME CONTROL AND LAW ENFORCEMENT ACT

1033: IT IS A CRIMINAL OFFENSE FOR AN INDIVIDUAL WHO HAS BEEN CONVICTED OF A FELONY INVOLVING DISHONESTY OR BREACH OF TRUST TO WILLFULLY ENGAGE OR PARTICIPATE (IN ANY CAPACITY) IN THE BUSINESS OF INSURANCE WITHOUT OBTAINING A "LETTER OF WRITTEN CONSENT TO ENGAGE IN THE BUSINESS OF INSURANCE" FROM THE REGULATING INSURANCE DEPARTMENT OF THE INDIVIDUAL'S STATE OF RESIDENCE. - SUCH AN INDIVIDUAL IS REQUIRED TO SUBMIT A WRITTEN REQUEST TO THE COMMISSIONER OF INSURANCE AND THE COMMISSIONER OF COMMERCE FOR PERMISSION PRIOR TO DOING BUSINESS. 1034: THE ATTORNEY GENERAL MAY BRING CIVIL ACTION IN THE APPROPRIATE UNITED STATE DISTRICT COURT AGAINST ANY PERSON WHO ENGAGES IN CONDUCT CONSTITUTING AN OFFENSE UNDER SECTION 1033 AND, UPON PROOF OF SUCH CONDUCT BY PREPONDERANCE OF THE EVIDENCE, SUCH PERSON SHALL BE SUBJECT TO A CIVIL PENALTY OF NOT MORE THAN $50,000 FOR EACH VIOLATION OR THE AMOUNT OF COMPENSATION WHICH A PERSON RECEIVE OR OFFERED FOR RHE PROHIBITED CONDUCT, WHICHEVER AMOUNT IS GREAER.

DEBTOR

A BORROWER OF MONEY OR A PURCHASER OR LESSEE OF GOODS , SERVICES, PROPERTIES, RIGHTS, OR PRIVILEGES FOR WHICH PAYMENT IS ARRANGED THROUGH A CREDITOR.

DIRECT LOSS

A LOSS THAT IS A DIRECT CONSEQUENCE OF PARTICULAR PERIL. FIRE DAMAGE TO AN APARTMENT BUILDING.

INDIRECT LOSS

A Loss that is the result of a covered peril but is not caused directly and immediately by that peril. THE LOSS OF RENTAL INCOME AS A RESULT OF THE FIRE.

AFFILIATE OF, OR PERSON AFFILIATED WITH A SPECIFIC PERSON IS

A PERSON WHO DIRECTLY OR INDIRECTLY THROUGH ONE OR MORE INTERMEDIARIES, CONTROL OR IS CONTROLLED BY THE PERSON SPECIFIED.

IMPAIRED OR SUBSTANDARD RISK

A PERSON WHOSE MORTALITY RISK IS GREATER THAN AVERAGE FOR HIS OR HER AGE. SUBSTANDARD RATING FACTOR INCLUDE VARIOUS MEDICAL CONDITIONS SUCH AS DIABETES, HYPERTENSION, AND HEART AILMENTS, HIGH RISK OCCUPATIONS SUCH S A LOGGERS

OPEN-END CREDIT

A PRE-APPROVED LOAN BETWEEN A FINANCIAL INSTITUTION AND BORROWER THAT MAY BE USED REPEATEDLY UP TO A CERTAIN LIMIT AND CAN SUBSEQUENTLY BE PAID BACK PRIOR TO PAYMENTS COMING DUE. - THE PRE-APPROVED AMOUNT WILL BE SET OUT IN THE AGREEMENT BETWEEN THE LENDER AND THE BORROWER. - OPE-END CREDIT = "LINE OF CREDIT" OR "REVOLVING LINE OF CREDIT" - INTEREST IS NOT USUALLY CHARGED ON THE PART OF THE LINE OF CREDIT THAT IS NOT USED. EX: CREDIT CARD AND HOME-EQUITY LINES OD CREDIT.

TO BE APPROVED:

A REFUND FORMULA MUST PROVIDE FOR A "SUM OF THE DIGITS" (ALSO CALLED "RULE OF 78") REFUND FOR A SINGLE PREMIUM STRAIGHT LINE DECREASING BENEFIT PLANS, A PRO-RATE REFUND FOR A LEVEL BENEFIT PLAN, OR AN ACTUARIALLY ACCEPTABLE REFUND OF THE UNEARNED PREMIUMS FOR OTHER BENEFIT PLANS.

STANDARD RISK

A RISK THAT MEETS THE SAME CONDITIONS OF HEALTH, PHYSICAL CONDITION, AND MORALS AS THE TABULAR RISKS ON WHICH THE RATE IS BASED WITHOUT EXTRA RATING OR SPECIAL RESTRICTION.

PREFERRED RISK

A person whose physical condition, occupation, mode of living, and other characteristics indicate aN ABOVE-AVERAGE EXPECTANCY AND, THEREFORE, WHO QUALIFIES FOR A PREMIUM RATE LESS THAN THAT OFFERED TO STANDARD RISK.

INCONTESTABILITY CLAUSE

AFTER THE CREDIT POLICY HAS BEEN IN FORCE FOR OVER 2 YEARS, THE INSURANCE COMPANY CANNOT CONTEST OR VOID THE POLICY EXCEPT FOR NONPAYMENT OF PREMIUM. IF THERE IS A MISREPRESENTATION OR CONCEALMENT DISCOVERED IN THE FIRST 2 YEAR, IT MUST BE MATERIAL FOR THE INSURANCE COMPANY TO DENY COVERAGE OR TO CANCEL THE POLICY,

SUICIDE CLAUSE

AN INSURER MAY EXCLUDE COVERAGE FOR SUICIDE OCCURRING WITHIN 1 YEAR AFTER THE EFFECTIVE DATE OF THE COVERAGE. ON AN OPEN-ENDED TRANSACTION, AN INSURER MAY APPLY A NEW SUICIDE EXCLUSION PERIOD TO THE PROTECTION OF A NEW ADVANCE OR CHARGE THAT CAUSES THE AMOUNT OF CREDIT LIFE INSURANCE TO EXCEED THE GREATER AMOUNT PREVIOUSLY SUBJECTED TO THIS EXCLUSION.

COMPENSATION

ANY FORM OF PAYMENT WHICH RESULTS DIRECTLY FROM THE SALE OF CONSUMER CREDIT INSURANCE. - COMMISSION - DIVIDENDS - EQUIPMENT -EXPENSE ALLOWANCES OR REIMBURSEMENT - EXPERIENCE REFUNDS - FACILITIES - GIFTS - GOOD/SERVICES -RETROSPECTIVE RATE CREDITS -SERVICE FEES

LEGAL HAZARD

ARISE FROM COURT ACTIONS WHICH INCREASE THE LIKELIHOOD OR SIZE OF THE LOSS. GROWING TENDENCY OF PEOPLE TO FILE LAWSUITS AND CLAIM ENORMOUS SUMS FOR LEGAL DAMAGES.

MORAL

ARISES FROM PEOPLE'S HABITS AND VALUES... *A DISHONEST PERSON.* INTENTIONALLY SETTING A FIRE IN ORDER TO COLLECT THE INSURANCE, FILING FALSE CLAIMS, EXCESSIVE SPEEDING TICKETS, OR POOR CREDIT REPORTS.

MORALE HAZARD

CARELESSNESS OF ATTITUDE OR IRRESPONSIBILITY. *A CARELESS PERSON* FAILING TO LOCK THE FRONT DOOR OF A HOUSE BECAUSE ANY LOSS WILL BE COVERED BY INSURANCE.

FAIR CREDIT REPORTING ACT

CONSUMER REPORT/CREDIT CHECK SAYS ANY REPORT MAY BE RUN BY THE INSURANCE COMPANY WHEN UNDERWRITING AN APPLICATION, HOWEVER: 1. THE CONSUMER MUST BE NOTIFIED THAT A CREDIT REPORT OR ANY OTHER REPORT WILL BE SOUGHT AND TOLD HOW IT WILL BE USED. YOU MUST BE TOLD IF INFORMATION IN YOUR FILE HAS BEEN USED AGAINST YOU. 2. YOU HAVE THE RIGHT TO ASK FOR YOUR CREDIT SCORE. 3. THE CONSUMER MUST BE TOLD HOW TO OBTAIN A COPY OF YOUR REPORT. THE CONSUMER HAS THE RIGHT TO KNOW WHAT IS ON THE REPORT. 4. INFORMATION ON THE REPORT CAN BE DISPUTED, AND IF THE REPORTING AGENCY CANNOT PROVE THE DISPUTED INFORMATION IS ACCURATE THE INFORMATION MUST BE REMOVED FROM THE PERSON'S FILE WITHIN 30 DAYS. 5. A BANKRUPTCY WILL SHOW FOR 7-10 YEARS ON YOUR CREDIT REPORT (7 YEARS IF THE DEBT WAS PAID, 10 YEARS IF NOT).

AUTHORIZED FORMS

CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH INSURANCE CAN ONLY BE ISSUED ON ONE OF THE FOLLOWING 4 FORMS: 1. INDIVIDUAL POLICY OF LIFE INSURANCE - ISSUED TO DEBTOR ON THE TERM PLAN. 2. INDIVIDUAL POLICIES OF ACCIDENT AND HEALTH INSURANCE- ISSUED TO DEBTOR ON A TERM PLAN, OR DISABILITY BENEFIT PROVISIONS IN INDIVIDUAL POLICIES OF CREDIT LIFE INSURANCE. 3. GROUP POLICIES OF LIFE INSURANCE - ISSUED TO CREDITORS PROVIDING INSURANCE UPON THE LIVES OF DEBTORS ON THE TERM PLAN. 4. GROUP POLICIES OF ACCIDENT AND HEALTH INSURANCE - ISSUED TO CREDITORS ON A TERM PLAN INSURING DEBTORS, OR DISABILITY BENEFIT PROVISIONS IN GROUP CREDIT LIFE INSURANCE POLICIES TO PROVIDE SUCH COVERAGE.

PHYSICAL HAZARD

DIRTY WINDSHIELDS, BROKEN HEADLIGHTS, EXPOSED WIRING, OR SEVERELY WORN CAR TIRES.

THE REFUND FORMULA THAT ARE ALLOWED

EACH INDIVIDUAL POLICY OR GROUP CERTIFICATE MUST PROVIDE THAT IN THE EVENT OF TERMINATION OF THE INSURANCE PRIOR TO THE SCHEDULED MATURITY DATE OF THE INDEBTEDNESS, ANY REFUND OR ANY AMOUNT PAID BY THE DEBTOR FOR INSURANCE WILL BE PAID OR CREDITED PROMPTLY TO THE PERSON ENTITLED THERETO. THE FORMULA TO BE USED IN COMPUTING SUCH A REFUND MUST BE FILED WITH AND APPROVED BY THE COMMISSIONER. THE FOLLOWING METHOD MUST BE APPROVED: 1. PRO-RATE REFUND METHOD - ALL UNEARNED PREMIUMS MUST BE RETURNED TO THE INSURED. 2, RULE OF ANTICIPATION REFUND METHOD: UNLESS THE COVERAGE IS LISTED IN THE PRO-RATE METHOD ABOVE, THE REFUND MUST BE AT LEAST WHAT WOULD HAVE BEEN CHARGED FOR THE REMAINING COVERAGE FOR THE REMAINING TERM OF DEBT. ** IF COVERAGE ENDS, THE INSURER MAY NOT CHARGE INSURANCE PREMIUM FOR THE FIRST 15 DAYS OF A MONTH BUT MAY CHARGE PREMIUM FOR A FULL MONTH IF THE DEBTOR IS COVERED FOR 16 DAYS OR MORE.** **NO REFUND OF $5 DOLLARS OR LESS NEEDS TO BE MADE.

REFUND, CREDITS, AND CHARGES TO DEBTOR

EACH INDIVIDUAL'S POLICY OR GROUP CERTIFICATE MUST PROVIDE THAT IN THE EVENT OF TERMINATION OF THE INSURANCE PRIOR TO THE SCHEDULED MATURITY DATE OF THE INDEBTEDNESS, ANY REFUND OF ANY AMOUNT PAID BY THE DEBTOR FOR INSURANCE WILL BE PAID OR CREDITED PROMPTLY TO THE PERSON ENTITLED THERETO. - THE COMMISSIONER MUST APPROVE REFUND FORMULAS BEFORE THEY ARE USED. THE INSURER MUST STATE THE BASIS FOR THE REFUND IN THE POLICY OR CERTIFICATE DELIVERED TO THE DEBTOR. **NO REFUND OF LESS THAN $5 DOLLARS NEEDS TO BE MADE.**

ADJUSTMENT OF PRIMA FACIE RATES

EVERY 3 YEARS, THE COMMISSIONER WILL REVIEW THE LOSS RATIO STANDARD AND THE PRIMA FACIE RATES TO DETERMINE THE RATE OF EXPECTED CLAIMS ON THE STATEWIDE BASIS AND COMPARE THE RATE OF EXPECTED CLAIM WITH THE RATE OF ACTUAL CLAIMS.

RISK MANAGEMENT: SHARE (WITH ANOTHER ENTITY)

EX: SHARING A FANCE BETWEEN MY NEIGHBOR'S HOUSE AND MINE IF THE WIND BLOWS IT, WE WILL SHARE THE COST OF REBUILDING IT.

LEGAL OBJECTION

IN ORDER FOR A CONTRACT TO BE LEGAL, IT MUST BE FOR LEGAL PURPOSES ONLY.

ELEMENT OF INSURABLE RISK:

IN ORDER FOR AN INSURANCE TO TAKE ANY RISK, THERE ARE CERTAIN CRITERIA THAT NEED TO BE MET. NOT ALL RISKS ARE INSURABLE. - THE LOSS CANNOT BE CATASTROPHIC: THIS MEANS NOT CATASTROPHIC TO THE INSURANCE COMPANY, NOT THE CONSUMER. THE COST OF NATURAL DISASTERS SUCH AS FLOODS OR HURRICANES MUST BE WITHIN THE CARRIER'S ABILITY TO PAY CLAIMS. - THE LOSS EXPOSURES MUST BE LARGE: UTILIZING THE LAW OF LARGE NUMBERS, INSURANCE COMPANIES CAN PREDICT THE NUMBER OF LOSSES AND, WITH THAT INFORMATION; THEY CAN ESTABLISH A PREMIUM. - THE LOSS MUST BE DEFINITE AND MEASURABLE: WE MUST BE ABLE TO TELL WHEN A LOSS HAS OCCURRED AND PLACE A VALUE ON THE LOSS (BILLS OR RECEIPTS FOR REPAIR). -THE LOSS MUST BE DUE TO CHANCE: NOT SOMETHING THAT IS CERTAIN TO HAPPEN. - THE LOSS MUST BE PREDICTABLE: MEANING IT MUST BE OF SUCH A NATURE THAT ITS FREQUENCY AND AVERAGE SEVERITY CAN BE READILY DETERMINED TO ESTABLISH THE REQUIRED PREMIUM.

ELEMENT OF CONTRACT/ESSENTIAL ELEMENT

INSURANCE CONTRACT - INSURANCE POLICIES ARE LEGAL CONTRACTS AND ARE ENFORCEABLE BY LAW. THE ENTIRE CONTRACT PROVISION STATES THE CONTRACT CONSISTS OF: THE APPLICATION, THE POLICY, AND ANY RIDERS OR ENDORSEMENTS. - ALL STATEMENTS ON AN APPLICATION ARE DEEMED TO BE REPRESENTATIONS, NO WARRANTIES. - 2 PARTIES IN AN INSURANCE CONTRACT: THE INSURER AND THE OWNER (THE OWNER COULD ALSO BE KNOWN AS THE NAMED INSURED OR THE FIRST NAME INSURED (FOR A CONTRACT WITH MULTIPLE OWNERS.))

CREDIT LIFE

IS A POLICY ISSUED ON THE LIFE OF A BORROWER WITH THE CREDITOR NAMED AS BENEFICIARY TO COVER THE REPAYMENT OF A LOAN IN THE EVENT THE BORROWER DIES BEFORE THE LOAN HAS BEEN REPAID. -CREDIT LIFE INSURANCE PAYS OFF ALL OR SOME OF THE LOAN IF YOU DIE DURING THE TERM OF COVERAGE. - IT WILL PAY DEATH BENEFITS WHETHER DEATH OCCURS ACCIDENTALLY OR BY NATURAL CAUSES. - THE DEATH PROCEEDS OR FACE AMOUNT OF THE POLICY MAY NOT EXCEED THE INDEBTEDNESS AT THE TIME OF DEATH. - THE CERTIFICATE MUST BE DELIVERED TO THE DEBTOR WITHIN 30 DAYS UPON ACCEPTANCE OF THE INSURANCE BY THE INSURANCE COMPANY.

PERIL

IS ANYTHING THAT CAUSES A LOSS. A WET FLOOR IS A HAZARD, SLIPPING ON THE FLOOR AND FALLING IS PERIL.

MATERIAL

IT IS A FACT THAT IS IMPORTANT ENOUGH THAT HAD THE INSURANCE COMPANY KNOWN IT, IT COULD HAVE CHANGED EITHER THE DECISION TO ISSUE THE INSURANCE POLICY OR TO ISSUE THE POLICY ON SUBSTANTIALLY DIFFERENT TERMS. THE MISSTATED INFORMATION IS SAID TO BE MATERIAL ONLY IF THE TRUTH WOULD HAVE RESULTED IN THE INSURER MAKING A DIFFERENT UNDERWRITING DECISION. **THE INSURANCE COMPANY MUST RETURN ALL OF THE PREMIUM PAID IF A POLICY IS DENIED DUE TO MATERIAL MISREPRESENTATION OR MATERIAL CONCEALMENT WITHIN THE FIRST 2 YEARS. AFTER 2 YEARS THE FULL POLICY BENEFIT IS PAID. THIS PROTECTS THE CONSUMER BY LIMITING THE DISCOVERY PERIOD TO 2 YEARS. **

CLOSE -END CREDIT

LOAN OR EXTENSION OF CREDIT IN WHICH THE PROCEEDS ARE DISPERSED IN FULL WHEN THE LOAN CLOSES. EX: MORTGAGE AND AUTO LOAN

INSURABLE INTEREST

LOSS THAT WOULD BE SUSTAINED ON DEATH OR DISABILITY OF ANOTHER, OR LOSS OF PROPERTY SUFFICIENT TO WARRANT COMPENSATION. INDEBTEDNESS OR FINANCIAL INTEREST IS CONSIDERED INSURABLE INTEREST IS CONSIDERED INSURABLE INTEREST FOR THE CREDITOR AND DEBTOR. LIFE AND HEALTH INSURANCE = INSURABLE INTEREST MUST EXIST AT THE TIME OF THE POLICY.

CREDIT INSURANCE

MAY BE WRITTEN AS AN INDIVIDUAL POLICY COVERING A SINGLE DEBTOR, OR IT CAN BE SOLD TO A MASTER POLICY ON A GROUP BASIS TO COVER MORE THAN ONE DEBTOR. - ALL CREDIT INSURANCE MUST BE EVIDENCE BY AN INDIVIDUAL POLICY, OR IN THE CASE OF GROUP INSURANCE, BE A CERTIFICATE OF INSURANCE. - IT IS THE RESPONSIBILITY OF THE INSURER THAT THESE POLICIES OR CERTIFICATES ARE PROVIDED TO THE DEBTOR AND MUST BE DELIVERED TO THE DEBTR WITHIN 30 DAYS UPON ACCEPTANCE OF THE INSURANCE BY THE INSURANCE COMPANY.

CONSUMER CREDIT INSURANCE

MEANS CREDIT LIFE INSURANCE OR CREDIT ACCIDENT AND HEALTH INSURANCE.

CONTROL

MEANS POSSESSIONS, DIRECT OR INDIRECT, OF POWER TO DIRECT OR CAUSE THE DIRECTION OF MANAGEMENT AND POLICIES OF A PERSON.

EARNED PREMIUM

MEANS THE TOTAL GROSS PREMIUMS THAT BECOME DUE TO THE INSURANCE COMPANY FOR INSURANCE COVERAGE. - THE INSURER MAY REDUCE EARNED PREMIUM ONLY FOR REFUND DUE TO TERMINATION OF COVERAGE. - THE UNEARNED PREMIUM IS CALCULATED ACCORDING TO THE SPECIFIED REFUND FORMULA.

IN ORDER FOR A CONTRACT TO BE CONSIDERED A LEGAL AND BINDING CONTRACT:

OFFER, ACCEPTANCE, CONSIDERATION, LEGAL OBJECTION, COMPETENT PARTIES

CREDIT PROPERTY INSURANCE

PROTECTS PERSONAL PROPERTY USED TO SECURE THE LOAN IF DESTROYED BY EVENT LIFE THEFT, ACCIDENT, OR NATURAL DISASTERS DURING THE TERM OF COVERAGE. - CREDIT PROPERTY INSURANCE IS NOT DIRECTLY RELATED TO AN EVENT AFFECTING BY ABILITY TO REPAY YOUR DEBT.

LEVEL TERM

PROVIDE PROTECTION THAT REMAINS CONSTANT FOR THE TERM OF THE CONTRACT. THE PREMIUM MAY INCREASE UPON RENEWAL DUE TO AN INCREASE IN THE INSURED'S AGE.

DECREASING TERM

PROVIDE PROTECTION WHICH DECREASES EACH YEAR. - THE MOST COMMONLY USE FOR DECREASING TERM IS TO COVER NEEDS THAT WILL DECREASE OVER TIME (EX: MORTGAGES AND OTHER LOANS)

RISK MANAGEMENT: REDUCTION AND LOSS PREVENTION

REDUCE THE CHANCE OF A LOSS EX: WEAR SEATBELT, DON'T TEXT WHILE DRIVING, ANNUAL WELLNESS EXAMS, FLU SHOTS AND FIRE DETECTORS, TO NUMBERED TAGS IN A DRESSING ROOM.

RISK

RISK IS THE POTENTIAL FOR LOSS OR POSSIBILITY OF LOSS. RISK IS THE UNCERTAINTY OF A LOSS (SPECIFICALLY, FINANCIAL LOSS). RISK COULD ALSO MEAN THE PERSON OR THINGS INSURED. - ONLY PURE RISK IS INSURABLE (THE CHANCE OF A LOSS, NO GAIN) - SPECULATIVE RISK THERE IS A CHANCE OF GAIN AS WELL AS A CHANCE OF LOSS, NOT INSURABLE.

PERMISSIBLE CHANGES

SHOULD THE CREDITOR CHANGE THE INSURANCE COMPANY, THE INSURANCE COMPANY MUST ISSUE NEW CERTIFICATES WITH THE NAME AND ADDRESS OF THE NEW COMPANY. - IF THE NEW PREMIUMS ARE HIGHER, THE CREDITOR CANNOT PASS THE HIGHER RATES TO THE DEBTOR. - IF THE NEW PREMIUMS ARE LOWER, THE CREDITOR MUST REFUND ANY UNEARNED PREMIUMS PROMPTLY TO THE DEBTOR.

HAZARD

SOMETHING THAT INCREASES THE CHANCE OF A LOSS. CAN BE HAZARDOUS HOBBIES, SUCH AS SKYDIVING OR SCUBA DIVING, OVER GORN BUSHES IN FRONT OF WINDOWS ON A HOUSE, OR FLAMMABLE MATERIALS LEFT NEXT TO AN OPEN FLAME.

THE COMMISSIONER DETERMINE IF BENEFITS ARE REASONABLE IN RELATION TO PREMIUM CHARGES BY:

STATE REGULATION DIRECTS INSURERS TO PROVIDE A REASONABLE BENEFIT IN RETURN FOR THE PREMIUM THEY CHARGE AND ESTABLISHES A NEW STANDARD OR "PRIMA FACIE" RATE, AND SETS A MINIMUM LOSS RATIO WHERE INSURERS WOULD PAY OUT AT LEAST 60 CENTS FOR EACH DOLLAR OF PREMIUM THEY COLLED AND 40 CENTS OF PREMIUM CAN GO FOR EXPENSES AND PROFIT.

EVIDENCE OF INDIVIDUAL INSURABILITY

STATEMENT FURNISHED BY THE DEBTOR RELATED TO: - THE HEALTH STATUS, HEALTH OR MEDICAL HISTORY OF THE DEBTOR - THE OCCUPATION OF THE DEBTOR -OTHER CONDITIONS FOR THE INSURANCE TO TAKE EFFECT. - EVIDENCE OF INDIVIDUAL INSURABILITY DOES NOT INCLUDE INFORMATION RELATED TO THE ELIGIBILITY OF THE DEBTOR FOR COVERAGE

OFFER

THE APPLICANT MAKES THE OFFER TO THE INSURANCE COMPANY (THE LEGAL CONTRACT IS WITH THE INSURER AND THE INSURED. ONE MUST MAKE AN OFFER AND THE OTHER ACCEPT IT.

AVERAGE NUMBER OF LIFE YEAR

THE AVERAGE NUMBER OF GROUP CERTIFICATES OF INDIVIDUAL POLICIES IN FORCE DURING THE EXPERIENCE PERIOD X THE NUMBER OF YEARS ON THE EXPERIENCE PERIOD.

Benefits

THE BENEFICIARY IS A PERSON OR CREDITOR DESIGNATED IN THE POLICY TO RECEIVE THE BENEFITS. - THE PAYMENT OF ANY BENEFIT IS CONDITIONAL UPON RECEIPT OF DUE PROOF THAT THE LOSS OF WHICH A CLAIM IS MADE HAS OCCURRED. - ALL BENEFITS MUST BE PAID TO THE CREDITOR WHO MUST APPLY THEM TO REDUCE OR EXTINGUISH THE UNPAID DEBT. - ANY EXCESS WILL BE PAID TO THE CREDITOR, THE SECOND BENEFICIARY, IF LIVING, OR TO THE ESTATE. DEBTORS MUST BE PROVIDED REASONABLE BENEFITS IN RETURN FOR THEIR PREMIUM PAYMENT. - 60% OF THE PREMIUM MUST GO TO BENEFITS FOR THE DEBTOE AND 40% OF THE PREMIUM MUST GO FOR EXPENSES AND PROFIT OF THE COMPANY.

AMOUNTS OF INSURANCE

THE INITIAL AMOUNT OF CREDIT LIFE INSURANCE UNDER AN INDIVIDUAL POLICY MAY NOT EXCEED THE TOTAL AMOUNT REPAYABLE UNDER THE CONTRACT OF INDEBTEDNESS. - WHERE AN INDEBTEDNESS IS REPAYABLE IN SUBSTANTIALLY EQUAL INSTALLMENTS, THE AMOUNT OF INSURANCE CAN AT NO TIME EXCEED THE SCHEDULED OR ACTUAL AMOUNT OF UNPAID INDEBTEDNESS, WHICHEVER IS GREATER. ***CONSUMERS ARE NOT REQUIRED TO BUY CREDIT INSURANCE IN ORDER TO RECEIVE APPROVAL FOR THEIR LOANS OR PURCHASES.***

ACCEPTANCE

THE INSURANCE COMPANY ACCEPTS THE OFFER BY ISSUING THE POLICY. A COUNTER-OFFER IS MADE BY THE INSURANCE COMPANY IF IT ISSUES THE POLICY OTHER THAN HOW IT WAS REQUIRED. THE APPLICANT ACCEPTS THE COUNTER-OFFER WHEN THE ADDITIONAL PREMIUM IS PAID , AND THE COUNTER-SHEET IS SIGNED BY THE OWNER/APPLICANT (INSURED) * OFFER AND ACCEPTANCE CONSTITUTE AN AGREEMENT. AGREEMENT MEAN TO CREATE A LEGAL RELATIONSHIP*

TRANSFERABILITY (A.K .A. ASSIGNMENT)

THE INSURANCE COMPANY CAN TRANSFER THE INSURED'S INTEREST IN AN EXISTING POLICY, THE INSURED CAN REQUEST A CHANGE TO BE MADE BUT ONLY THE INSURANCE COMPANY CAN MAKE THE CHANGE.

CREDITOR

THE PARTY TO WHOM MONEY IS OWED. EX: INDIVIDUAL, A BANK, A MORTGAGE COMPANY, ETC. WHICH PAYMENT IS MADE THROUGH CREDIT TRANSACTIONS.

THE MANDATORY BENEFITS THAT APPLY TO PRIMA FACIE CREDIT ACCIDENT AND HEALTH INSURANCE RATE:

THE PREMIUM RATES APPLY TO CONTRACTS PROVIDING CREDIT ACCIDENT AND HEALTH INSURANCE THAT CONTAIN TERMS AS FAVORABLE TO INSURED DEBTORS AS LISTED BELOW: 1. THE INSURER MAY ONLY EXCLUDE BENEFITS FOR DISABILITIES THAT RESULT FROM THE FOLLOWING; - WAR OR ANY ACT OF WAR - ELECTIVE SURGERY - INTENTIONALLY SELF-INFLICTED INJURY - FLIGHT IN ANY AIRCRAFT OTHER THAN A COMMERCIAL SCHEDULED AIRCRAFT. 2. ANY PRE-EXISTING CONDITION EXCLUSION DOES NOT APPLY TO DISABILITIES THAT BEGIN AT LEAST 6 MONTHS AFTER THE EFFECTIVE DATE. 3. AN INSURER MAY REQUIRE A STATEMENT THAT THE DEBTOR IS ACTIVELY AT WORK BEFORE INSURANCE BECOME EFFECTIVE. - THE INSURER MAY NOT REQUIRE THE INSURED DEBTOR TO BE EMPLOYED MORE THAN 30 HOURS PER WEEK. - IF A DEBTOR IS ABSENT DUE TO A REGULAR DAY OFF, HOLIDAY, OR PAID VACATION, THE COMMISSIONER PRESUMES THE DEBTOR IS ACTIVELY AT WORK.

THE PRO-RATE UNEARNED GROSS PREMIUM METHOD OR THE RULE OF ANTICIPATION METHOD OF REFUNDS ARE USUALLY USED:

THE PRO-RATE UNEARNED GROSS PREMIUM REFUND METHOD - MUST BE USED FOR LEVEL TERM CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE WHERE THE DEBTOR IS NOT CHARGED ON A SINGLE PREMIUM BASIS. THE RULE OF ANTICIPATION METHOD - MUST BE USED UNLESS THE COVERAGE IS LISTED UNDER THE PRO-RATE METHOD ABOVE. THE REFUND MUST BE AT LEAST WHAT WOULD HAVE BEEN CHARGED FOR THE REMAINING COVERAGE FOR THE REMAINING TERM OF DEBT. AN INSURER MAY FILE OTHER METHODS IF THEY GENERATE EQUIVALENT RESULTS.

RISK MANAGEMENT: TRANSFER

THE RISK IS TRANSFERRED TO AN INSURANCE COMPANY. THE PARTY ASSUMING THE RISK WLL COLLECT PREMIUM FROM A LARGE NUMBER OF CLENTS IN ORDER TO PAY FOR ANY LOSSES.

LIMITATION OF COVERAGE

THE TOTAL AMOUNT OF PERIODIC INDEMNITY PAYABLE BY CREDIT ACCIDENT AND HEALTH INSURANCE IN THE EVENT OF DISABILITY MUST NOT EXCEED THE AGGREGATE OF THE PERIOD SCHEDULED UNPAID INSTALLMENTS OF THE INDEBTEDNESS. - THE AMOUNT OF SUCH PERIODIC INDEMNITY PAYMENT CANNOT EXCEED THE ORIGINAL INDEBTEDNESS DIVIDED BY THE NUMBER OF PERIODIC INSTALLMENTS. - COVERAGE MUST END WITHIN 15 DAYS AFTER THE DEBT ENDS.

INDEBTEDNESS

THE TOTAL AMOUNT PAYABLE BY A DEBTOR TO A CREDITOR IN CONNECTION WITH THE LOAN OR OTHER CREDIT TRANSACTION. * THE INITIAL AMOUNT OF CREDIT LIFE INSURANCE UNDER INDIVIDUAL POLICY MAY NOT EXCEED THE TOTAL AMOUNT REPAYABLE UNDER THE CONTRACT OF INDEBTEDNESS.*

PROOF OF LOSS

THIS IS A FORM COMPLETED BY THE CLAIMANT LISTING THE PROPERTY THAT HAS BEEN EITHER LOST OR DAMAGED DUE TO A COVERED LOSS.

CONSIDERATION

THIS MEANS THAT SOMETHING OF VALUE MUST BE EXCHANGED BY ALL PARTIES FOR THE CONTRACT TO BE LEGAL. IT IS A SIGNED AND COMPLETED APPLICATION, PLUS PREMIUM FROM THE INSURED. THE CONSIDERATION DATE IS USUALLY THE EFFECTIVE DATE OF COVERAGE.

CREDIT LIFE TRANSACTION

TRANSACTION BETWEEN LENDER AND A BORROWER WHERE THE BORROWER AGREES TO REPAY A LOAN OVER A PERIOD OF TIME SUBJECTED TO MINIMUM A REPAYMENT SCHEDULE.

RISK MANAGEMENT: AVOIDANCE

WATCH FOR AND AVOID ANY POTENTIAL RISK. EX: YOU DON'T WANT TO BE IN A CAR ACCIDENT, NEVER GET INTO A CAR OR AVOID HAZARDOUS DRIVING CONDITIONS.

RISK MANAGEMENT: RETENTION

YOU PAY FOR ANY LOSSES.