(1) Upon prepayment in full of a consumer credit sale or consumer loan by the proceeds of consumer credit insurance, the debtor or his estate is entitled to a refund of any portion of a separate charge for insurance which by reason of prepayment is retained by the creditor or returned to him by the insurer unless the charge was computed from time to time on the basis of the balances of the debtor’s account.

(2) This chapter does not require a creditor to grant a refund or credit to the debtor if any refund or credit due to the debtor under this chapter amounts to less than two dollars, and except as provided in subsection (1) does not require the creditor to account to the debtor for any portion of a separate charge for insurance because:

(a) the insurance is terminated by performance of the insurer’s obligation;

(b) the creditor pays or accounts for premiums to the insurer in amounts and at times determined by the agreement between them; or

(c) the creditor receives directly or indirectly under any policy of insurance a gain or advantage not prohibited by law.

(3) Except as provided in subsection (2), the creditor shall promptly make or cause to be made an appropriate refund or credit to the debtor with respect to any separate charge made to him for insurance if

(a) the insurance is not provided or is provided for a shorter term than for which the charge to the debtor for insurance was computed; or

(b) the insurance terminates prior to the end of the term for which it was written because of prepayment in full or otherwise.

(4) A refund or credit required by subsection (3) is appropriate as to amount if it is computed according to a method prescribed or approved by the Director of the Department of Insurance or a formula filed by the insurer with the Director of the Department of Insurance at least thirty days before the debtor’s right to a refund or credit becomes determinable, unless the method or formula is employed after the Insurance Commissioner notifies the insurer that he disapproves it. The rule of 78’s or sum of the digits method is a proper method of computing refunds.