Consumer Credit Insurance Basics (p 41-47)

Question 1

Credit life insurance

Answer 1

Insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction

Question 2

Credit accident and health insurance

Answer 2

Insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined on policy

Question 3

Creditor

Answer 3

The lender of money or vendor or lessor of goods, services, property, rights or privileges, for which payment is arranged through a credit transaction or any successor to the right, title or interest of any such lender, vendor or lessor

Question 4

Debtor

Answer 4

A borrower of money or purchaser or Lesee of goods, services, property, rights or privilages for which payment is arranged through a credit transaction

Question 5

Indebtedness

Answer 5

The total amount payable by a debtor to a creditor in connection with a loan or other credit transaction

Question 6

Credit life insurance

Answer 6

Pays off all or some of your loan if you die during the term of coverage

Question 7

Credit IUI

Answer 7

Involuntary loss of income insurance, it pays a specified number of monthly loan payments if you lose your job due to no fault of your own during the term of coverage

Question 8

Credit property insurance

Answer 8

Protects personal property used to secure the loan if destroyed by events like theft, accident, or natural disasters during the term of coverage

Question 9

Markets credit insurance is sold in

Answer 9

Credit unions, banks, finance companies, automobile dealers, retailers, credit card companies.

Question 10

The purpose of credit insurance

Answer 10

To guarantee the repayment of their loans to earn a commission

Question 11

Closed-end transaction

Answer 11

Borrowing a certain amount of money for a specific period of time (Installment loans/single payment loans/balloon payments)

Question 12

Open-end transaction

Answer 12

A loan in which the amount of the credit extended can be increased at any time (credit cards/line of credit) The monthly outstanding balance premium determination is whereby the balance is multiplied by the premium rate per $1000 of coverage

Question 13

Group Credit Insurance

Answer 13

Covering a group of individuals and the insurer issues a master policy then issues certificates of insurance to each person covered

Question 14

A certificate of insurance must be delivered to the insured debtor within ____ days of incurring the debt (group insurance)

Answer 14

30

Question 15

Maximum coverage and term of coverage of credit life or A&H (individual insurance)

Answer 15

Cannot exceed the total amount of indebtedness but cannot extend more than 15 days beyond the maturity date of the indebtedness

Question 16

When is joint credit life insurance paid out?

Answer 16

upon the first death

Question 17

The commissioner has how many days after receipt to approve or disapprove policies, forms, premiums, etc.

Answer 17

30 days

Question 18

With group credit insurance, who must be eligible?

Answer 18

all debtors

Question 19

Group insurance policy premiums are usually subject to what?

Answer 19

experience rating

Question 20

All groups are rated together AKA…

Answer 20

Community rating

Question 21

Post-claim underwriting

Answer 21

unlawful in Michigan determining whether an individual meets underwriting criteria after the receipt of a claim and voiding coverage or denying the claim based upon that determination

Question 22

Termination of group credit insurance

Answer 22

Coverage shall be continued for the entire period for which the single premium has been paid.

Question 23

Termination of group credit insurance notice

Answer 23

30 days before the effective date of termination

Question 24

Credit life insurance maximum coverage (gross coverage)

Answer 24

The total amount indebtedness owed under a closed-end agreement

Question 25

Net payoff coverage

Answer 25

Amount of insurance covers the net indebtedness of the loan which is the total amount owed at any given point in time – would not include the unpaid interest for the remaining term of the loan