Other Types of Credit Insurance (p 54-61) Flashcards
Credit Unemployment Insurance eligibility
cannot be self employed, active duty military, or an independent contractor
Credit Property Insurance
Cancels the debt owed on items purchased on an insured credit account if the property purchased is destroyed by a specific named perils such as an accident, theft, flood, or earthquake.
GAP
Covers the difference between the actual cash value (ACV) of the car and the outstanding loan balance at the time of loss.
Mortgage Guaranty
Insurance purchased to provide indemnification to the lender in case a borrower fails to meet required mortgage payments.
PMI (Private Mortgage Insurance) can be cancelled when?
With enough equity in the home. Your lender must automatically cancel PMI when your outstanding loan balance drops to 78%
Loan-to-value formula
Mortgage amount owed/appraised value
Consumer Credit Protection Act
(Truth and lending act TILA) federal law that was designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangements and all costs.
Regulation Z
Most of the specific requirements imposed by TILA are found in Reg Z
The purpose of TILA
To promote the informed use of consumer credit by requiring disclosures about its terms, cost to standardize, the manner in which costs associated with borrowing are calculated and disclosed
TILA does not
regulate the charges that may be imposed for consumer credit. It only requires uniform or standardized disclosure of costs & charges
Fair Credit Reporting Act
federal law which regulates confidential, fair and accurate reporting of consumer information. It applies to consumer reporting agencies investigating individuals applying for credit, employment, or the purchase of life insurance
Maximum coverage
Cannot exceed the total amount of indebtedness
Credit life term of coverage (individual)
Effective date that the debtor becomes obligated to the creditor
Credit life term of coverage (group)
Effective on the date of the group policy. The term may not exceed 15 days beyond the scheduled maturity date of the debt except when extended without additional cost pursuant to a written agreement
Voluntary prepayment of indebtedness
the insurance will be terminated and a refund of the credit life premium shall be made to the debtor. Refunds on A&H insurance will give an appropriate refund. If a claim was filed, the amount may be determined as if the prepayment did not occur.
