Section 26: Insurance
Section 26. A. Where a seller or sales finance company undertakes to provide or supply insurance on the goods sold, or on which services were rendered, under a retail installment sale agreement or revolving credit agreement, at the buyer's expense, the amount charged any buyer for such insurance shall not exceed the premium actually payable by the seller or sales finance company and in no event more than the premium chargeable in accordance with the rates, if any, filed with the commissioner of insurance. The foregoing shall not apply to credit life insurance or credit accident and health insurance, referred to in subsection C, which shall be the only credit life insurance and accident and health insurance authorized in connection with any retail installment sale agreement, or revolving credit agreement.
B. If dual interest insurance on the goods is purchased by the holder he shall, within thirty days after the execution of the retail installment sale agreement or revolving credit agreement, send or cause to be sent to the buyer a copy of the policy or policies of insurance, written by an insurance company authorized to do business in the commonwealth, or a certificate of insurance clearly setting forth the nature of the insurance coverage. The buyer shall have the privilege of purchasing such insurance from the agent or broker of his own selection, but in such case the inclusion of the insurance premium in the retail installment sale agreement or revolving credit agreement shall be optional with the seller. If the buyer selects his own licensed agent or broker there shall be no obligation on the seller or sales finance company to forward a copy of the policy or policies or any certificate to the buyer.
C. In the event the charge or any portion thereof for life insurance under a policy issued pursuant to clause (c) of the first paragraph of section one hundred and thirty-three of chapter one hundred and seventy-five, or for accident and health insurance under a policy issued pursuant to clause (j) of the first sentence of subdivision (A) of section one hundred and ten of chapter one hundred and seventy-five or for involuntary unemployment insurance under a policy issued pursuant to clause (a) of section one hundred and seventeen D of chapter one hundred and seventy-five, which unless otherwise authorized shall be the only types of insurance authorized in connection with a retail installment sale agreement or revolving credit agreement, is paid by the buyer or buyers to the seller, it shall not be deemed a charge in violation of sections eleven or twenty-seven.
The seller may make a charge for said life insurance based on a rate which shall not exceed the premium charged by the insurer pursuant to said insurer's schedule or schedules of premium rates currently on file with the commissioner of insurance for said insurance on obligations to said seller pursuant to the provisions of section one hundred and seventeen C of chapter one hundred and seventy-five. The amount of said insurance shall at no time exceed the greater of the scheduled or actual amount owing on the agreement exclusive of unearned finance charges. Said charge may be collected either as a single premium on scheduled insured balances or periodically on actual monthly insured balances.
The seller may make a charge for said accident and health insurance or said involuntary unemployment insurance based on a rate which shall not exceed the premium charged by the insurer pursuant to said insurer's schedule or schedules of premium rates currently on file with the commissioner of insurance for said insurance on obligations to said seller pursuant to the provisions of said section one hundred and seventeen C or section one hundred and seventeen D of said chapter one hundred and seventy-five. Said charge may be collected either as a single premium on scheduled insured balances or periodically on outstanding balance basis, using a monthly term rate that is actuarially consistent with the applicable single premium rate filed with said commissioner, which monthly rate shall be applied each month to the sum of the remaining insured monthly benefits. For interest bearing agreements, other than pre-computed agreements, a uniform monthly rate filed with said commissioner may be applied to the remaining monthly debt balances of all insured agreements, exclusive of unearned finance charges, which uniform monthly rate shall produce, for the aggregate of all said insured agreements, an aggregate premium that is actuarially consistent with the aggregate premium that would result from using said applicable single premium rates filed with said commissioner applied to the total of the monthly benefits on all said insured agreements. All group accident and health insurance policies shall have a waiting period of thirty days and shall have benefits which are not retroactive. Credit accident and health insurance may be offered only in those cases where the original amount of the retail installment sale agreement, exclusive of finance charges, exceeds five hundred dollars. No group involuntary unemployment insurance policy shall have a waiting period in excess of thirty-one days.
In the event of prepayment of the retail installment sale agreement or revolving credit agreement, there shall be a refund of any unearned charges for said life insurance or accident and health insurance or involuntary unemployment insurance computed on a method which is at least as favorable to the buyer or buyers as the actuarial method, which for single premiums shall be defined as a refund of unearned premium equal to the premium cost of coverage equal to the remaining scheduled benefits for a term equal to the remaining period from the date of said prepayment to the originally scheduled termination date of coverage, computed at the schedule of rates in effect when the charge for said insurance was made. If said prepayment is made other than on an installment due date it shall be deemed to have been made on the first installment due date if said prepayment is made before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of said prepayment. The holder of the agreement shall refund said unearned charges in the event of said prepayment.
The amount of death benefit payable shall be computed as of the date of death and shall, subject to any dollar limit specified in the group policy, include not less than the equivalent of six past due monthly payments on the agreement if and to the extent that payments are past due whether from delinquency, deferral, extension or other reason. No anticipated delinquency value shall be included in the amount of coverage on which said life insurance premiums are calculated. In the computation of said benefit, the assumed amount of said insurance shall not be less than the lesser of (1) the maximum amount of said insurance specified in the group policy, or (2) the actual outstanding principal balance of the indebtedness including the equivalent of up to six past due monthly payments if and to the extent that payments are past due. Notwithstanding the previous sentence, in the event an excess charge is made for said insurance, said amount of death benefit shall at no time be less than the amount for which a charge has been paid by the insured.
Every disclosure statement under the provisions of chapter one hundred and forty D involving said life insurance or accident and health insurance or involuntary unemployment insurance issued pursuant to this subsection shall contain all or part of the following language, corresponding to the types of insurance offered, printed in ten point boldface type:
YOU CANNOT BE DENIED CREDIT SIMPLY BECAUSE YOU CHOOSE NOT TO BUY CREDIT INSURANCE. CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE AND CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED TO OBTAIN CREDIT. INSURANCE WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL CHARGE.
The enrollment for said insurance shall not be a condition of obtaining financing nor shall it be a condition of entering into a retail installment sales agreement or revolving credit agreement. The denial of credit for failure to enroll for said insurance shall constitute a violation of chapter ninety-three A and chapter one hundred and seventy-six D.
Said involuntary unemployment insurance shall not be offered in connection with a consumer credit transaction subject to this section until the credit decision has been made and communicated to the credit applicant; provided, however, nothing in this sentence shall prohibit making pamphlets available to credit applicants, responding to questions by credit applicants concerning said insurance, or providing credit applications which contain a written offer of insurance to credit applicants.
This subsection shall not apply to insurance for which no identifiable charge is made to the buyer or buyers.
D. Any cancellation, surrender, or other refunds, and all dividends, received under non-group policies by the seller or any holder of the agreement shall forthwith be remitted to the buyer, or credited against any amounts then due under the agreement by the buyer to the seller or holder except to the extent applied toward payment for similar insurance protecting the interests of the buyer and the holder or either of them.