§431:10D-203  Debtor groups.  The lives
of a group of individuals may be insured under a policy issued to a creditor or
its parent holding company or to a trustee or trustees or agent designated by
two or more creditors, which creditor, holding company, affiliate, trustee,
trustees, or agent shall be deemed the policyholder, to insure debtors of the
creditor or creditors, subject to the following requirements:



(1)  The debtors eligible for insurance under the
policy shall be all of the debtors of the creditor or creditors or all of any
class or classes thereof.  The policy may provide that the term debtors shall
include:



(A)  Borrowers of money or purchasers or
lessees of goods, services, or property for which payment is arranged through a
credit transaction;



(B)  The debtors of one or more subsidiary
corporations; and



(C)  The debtors of one or more affiliated
corporations, proprietorships, or partnerships, if the business of the
policyholder and the affiliate is under common control;



(2)  The premiums for the policy shall be paid either
from the creditor's funds, or from charges collected from the insured debtors,
or from both.  A policy on which part or all of the premiums is to be derived
from the collection from the insured debtors of identifiable charges not
required of uninsured debtors shall not include, in the class or classes of
debtors eligible from insurance, debtors under obligations outstanding at its
date of issue without evidence of individual insurability unless at least
seventy-five per cent of the then eligible debtors elect to pay the required
charges.  Except as provided in paragraph (3), a policy on which no part of the
premium is to be derived from the collection of such identifiable charges shall
insure all eligible debtors;



(3)  An insurer may exclude any debtors as to whom
evidence of individual insurability is not satisfactory to the insurer;



(4)  The policy may be issued only if the group of
eligible debtors is then receiving new entrants at the rate of at least one
hundred persons yearly, or may reasonably be expected to receive at least one
hundred new entrants during the first policy year, and only if the policy
reserves to the insurer the right to require evidence of individual
insurability if less than seventy-five per cent of the new entrants become
insured;



(5)  The amount of the insurance on the life of any
debtor shall at no time exceed the greater of the scheduled or actual amount of
unpaid indebtedness to the creditor, except that if the sole purpose of the
loan is to provide future advances to the debtor to meet education or
education-related expenses of the debtor, the debtor's spouse, children or
other dependents, the amount of insurance may equal, but may not exceed, the
total amount of the described expenses forecast at the time of entry into the
loan agreement with the creditor, less the amount of all repayments by the
debtor.  In the case of revolving loan or revolving charge accounts, the
insurance shall at no time exceed the unpaid indebtedness;



(6)  The insurance shall be payable to the creditor or
any successor to the right, title, and interest of the creditor.  The payment
shall reduce or extinguish the unpaid indebtedness of the debtor to the extent
of the payment and, whenever the amount of insurance exceeds the unpaid
indebtedness, any such excess shall be payable to a beneficiary, other than the
creditor, named by the debtor or to the debtor's estate; and



(7)  Payment by the debtor insured under any such
group life insurance contract of an amount not in excess of the premium charged
the creditor by the insurer for such insurance pertaining to the debtor, shall
not be deemed to constitute a charge upon a loan in violation of any banking or
usury law or any law regulating installment sales. [L 1987, c 347, pt of §2; am
L 2004, c 122, §48]