SECTION 3.5502. Joint Credit Accident and Health Insurance

(a) Joint debtors, for purposes of credit accident and health insurance written under Insurance Code, Chapter 1153 means only spouses or business partners, and such persons must be jointly and severally liable for repayment of the single indebtedness and be joint signers of the instrument of indebtedness. Endorsers and guarantors are not eligible for credit insurance coverage. Joint accident and health coverage shall not be written covering more than two debtors.

(b) Coverage may be provided by either of the methods set forth in paragraphs (1) and (2) of this subsection:

(1) each debtor is insured for 100% of the disability payment;

(2) each debtor is insured for a portion of the disability payment. The total of the portions shall equal 100% of the disability payment. The joint disability insurance benefit cannot exceed the amount of insurance that would have been provided if coverage had been issued on a single debtor.

(c) Joint disability coverage shall be evidenced by an individual policy or, in the case of group insurance, by a certificate of insurance. The form shall specify the amount of disability benefit to be provided on each debtor. The coverage shall not be provided by two single individual disability policies or by two single group disability certificates of insurance. Jointly indebted persons shall not both be covered separately at single accident and health rates.

(d) Joint disability forms shall provide that if coverage on one of the joint debtors is terminated, the coverage on the other debtor shall be continued under a single individual disability policy or a single group disability certificate. Coverage may be terminated for any of the reasons stated in paragraphs (1) - (4) of this subsection:

(1) the coverage is successfully contested;

(2) the coverage was issued in error to a joint insured who exceeded the eligibility age limits and who correctly stated his age. Under these circumstances, the insurer has the right to terminate the portion of coverage provided on such insured as long as the adjustment is handled as set forth in §3.5106(b) of this title (relating to Prohibited Provisions and Practices) addressing excess coverage;

(3) coverage was issued in error to a joint insured who did not meet the eligibility employment requirements, if required, and who correctly stated his employment status in writing. Under these circumstances, the insurer has the right to terminate the portion of coverage provided on such insured as long as the adjustment is made as set forth in §3.5106(b) of this title addressing excess coverage;

(4) suicide or any other life exclusions, as set forth in the policy and/or certificate of insurance.

(e) If termination occurs for any of the reasons set forth in subsection (d)(1) - (3) of this section, the amount of premium refund required will be equal to the difference between the premium charged for joint disability coverage and the premium that would have been charged if only single disability coverage (on a single insured) had been provided at the time the coverage was originally issued. If termination occurs for the reason set forth in subsection (d)(4) of this section, the amount of premium refund required will be equal to the unearned portion, at the date of death, of the premium charged for joint disability coverage minus the unearned portion, at the date of death, of the premium that would have been charged if only single disability coverage (on the single "surviving" insured) had been provided at the time the coverage was originally issued. The refund for joint disability coverage is to be paid in addition to the refund for joint life insurance coverage, in accordance with §3.5104(a)(2) of this title (relating to Benefits and Refunds), if joint life coverage was issued.

(f) If a separate identifiable premium is charged for the joint disability coverage, and if joint coverage is desired by the debtors, each debtor must elect and sign for the joint coverage.

(g) The maximum premiums to be charged for joint disability coverage when each debtor is insured for 100% of the disability payment must be equal to the amount set forth in the latest adopted presumptive premium rates for joint credit disability coverage. The maximum premiums to be charged for joint disability coverage when each debtor is insured for a portion of the disability payment, with the total of the portions equal to 100% of the disability payment, must be equal to the premium that would have been charged if 100% of the disability insurance amount was provided on a single life, as set forth in the latest adopted presumptive premium rates for single life credit disability coverage.

(h) The annual experience data reports required under §3.5701 of this title (relating to Statistical Data and Annual Experience Calls) shall be submitted as follows:

(1) if joint disability coverage is provided on each debtor for 100% of the disability payment, the experience data will be reported as joint disability coverage 1;

(2) if joint disability coverage is provided on each debtor for a portion of the disability payment, with the total of the portions equal to 100%, the experience data will be reported as joint disability coverage 2.

Source Note: The provisions of this §3.5502 adopted to be effective May 20, 1996, 21 TexReg 4054; amended to be effective June 7, 2005, 30 TexReg 3210