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

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

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

(B)  The debtors of one or more subsidiarycorporations; and

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

(2)  The premiums for the policy shall be paid eitherfrom 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 derivedfrom the collection from the insured debtors of identifiable charges notrequired of uninsured debtors shall not include, in the class or classes ofdebtors eligible from insurance, debtors under obligations outstanding at itsdate of issue without evidence of individual insurability unless at leastseventy-five per cent of the then eligible debtors elect to pay the requiredcharges.  Except as provided in paragraph (3), a policy on which no part of thepremium is to be derived from the collection of such identifiable charges shallinsure all eligible debtors;

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

(4)  The policy may be issued only if the group ofeligible debtors is then receiving new entrants at the rate of at least onehundred persons yearly, or may reasonably be expected to receive at least onehundred new entrants during the first policy year, and only if the policyreserves to the insurer the right to require evidence of individualinsurability if less than seventy-five per cent of the new entrants becomeinsured;

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

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

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