House Bill No. 117
Introduced By pavlovich
By Request of the State Auditor
A Bill for an Act entitled: "An Act requiring that credit disability insurance for credit card indebtedness provide coverage
for minimum payments,
interest FINANCE CHARGES, and premium payments throughout the term of a disability; and
Be it enacted by the Legislature of the State of Montana:
Section 1. Section 33-21-202, MCA, is amended to read:
"33-21-202. Amount. (1) The initial amount of credit life insurance may not exceed the total amount repayable under the contract of indebtedness. If an indebtedness is repayable in substantially equal installments, the amount of credit life insurance may not exceed the scheduled or actual amount of unpaid indebtedness on the date of death, whichever is greater. The amount of credit life insurance written in connection with:
(a) a credit transaction repayable over a term in excess of 63 months or, at the option of the insurer, for a shorter term may not exceed the actual amount of unpaid indebtedness on the date of death, excluding any:
(i) unearned interest or finance charges; and
(ii) delinquency or extension exceeding 4 months;
(b) an open-end credit agreement having a credit limit exceeding $10,000 may not exceed the plan's credit limit;
(c) an agricultural loan commitment not exceeding 1 year may not exceed the amount of the loan commitment on a nondecreasing or level term plan; and
(d) an education loan commitment may be for the amount of the portion of the commitment that has not been advanced by the creditor.
(2) The amount of periodic indemnity payable by credit disability insurance in the event of disability, as defined in the policy, may not exceed:
(a) the aggregate of the periodic scheduled unpaid installments of indebtedness; and
(b) the original indebtedness divided by the number of periodic installments.
(3) A group or individual credit disability insurance policy or a certificate or a membership contract that provides coverage
for credit card indebtedness, must provide coverage for the payment of the following amounts due on the amount of
outstanding balance at the time of disability during each billing cycle throughout the term of the disability: (a) minimum payment; (b) accrued interest; and (c) credit disability insurance premium payment.
(3) A GROUP OR INDIVIDUAL CREDIT DISABILITY INSURANCE POLICY OR A CERTIFICATE THAT PROVIDES COVERAGE FOR CREDIT CARD INDEBTEDNESS MUST PROVIDE A DISABILITY BENEFIT DURING EACH CREDIT CARD BILLING CYCLE THAT, SUBJECT TO ANY SPECIFIED DOLLAR AMOUNT LIMIT DEFINED IN THE POLICY OR CERTIFICATE, MAY NOT BE LESS THAN THE GREATER OF THE FOLLOWING AMOUNTS:
(A) THE MINIMUM PAYMENT REQUIRED BY THE CREDITOR FOR THE BILLING CYCLE PURSUANT TO THE CREDIT CARD CONTRACT, BASED ON THE INSURED BALANCE AS OF THE DATE THAT AN INSURED DISABILITY COMMENCES; OR
(B) THE SUM OF THE FOLLOWING AMOUNTS PAYABLE IN THE BILLING CYCLE AND BASED ON THE INSURED BALANCE ON THE DATE THAT AN INSURED DISABILITY COMMENCES:
(I) THE FINANCE CHARGE CALCULATED PURSUANT TO THE CREDIT CARD CONTRACT;
(II) ALL PREMIUMS CHARGED FOR CREDIT DISABILITY INSURANCE COVERAGE; AND
(III) ALL OTHER CHARGES ON THE BALANCE THAT ARE INCURRED IN THE BILLING CYCLE."