Arizona Laws 20-1606. Maximum amount of credit disability insurance and credit unemployment insurance
A. The total amount of periodic indemnity payable by credit disability insurance in the event of disability, as defined in the policy, or credit unemployment insurance, in the event of unemployment, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the gross debt or, with respect to group insurance where the indebtedness is repayable in installments, the maximum sum permitted by section 20-1401. The amount of each periodic indemnity payment shall not exceed the original gross debt divided by the number of periodic installments.
Terms Used In Arizona Laws 20-1606
- Credit disability insurance: means insurance on a debtor to provide indemnity for payments becoming due or outstanding on a specific loan or other credit transaction while the debtor has a disability as defined in the policy or certificate. See Arizona Laws 20-1603
- Credit unemployment insurance: means casualty insurance on a debtor to provide indemnity for payments or debt becoming due on a specific loan or other credit transaction while the debtor is involuntarily unemployed as defined in the policy. See Arizona Laws 20-1603
- Creditor: means the lender of money or vendor or lessor of goods, services, property, rights or privileges, including a lessor under a lease intended as a security, where payment is arranged through a credit transaction. See Arizona Laws 20-1603
- Gross debt: means the sum of the remaining payments that a debtor owes a creditor. See Arizona Laws 20-1603
- Net debt: means the amount necessary to liquidate a debt in a single lump sum payment, excluding all unearned interest and other unearned finance charges. See Arizona Laws 20-1603
- Open-end credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) Source: OCC
B. Notwithstanding subsection A of this section:
1. For credit disability insurance or credit unemployment insurance written in connection with an open-end credit agreement, the amount of insurance shall not exceed the gross debt which would accrue on that amount using the periodic indemnity. Subject to any policy maximums, the periodic indemnity shall not be less than the creditor‘s minimum repayment schedule.
2. An insurer may offer credit disability insurance with a periodic or lump sum indemnity that exceeds the creditor’s minimum repayment schedule if no single indemnity exceeds the net debt.