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054.00.12-10. REFUND FORMULA.

AR ADC 054.00.12-10Arkansas Administrative Code

West's Arkansas Administrative Code
Title 054. Insurance Department
Division 00.
Rule 12. Credit Life and Credit Disability Insurance
Ark. Admin. Code 054.00.12-10
054.00.12-10. REFUND FORMULA.
Currentness
10.1 With respect to policies issued and certificates delivered after the effective operative date of this regulation:
(a) The refund of an unearned amount paid by or charged to the debtor for insurance in the case of reducing term credit life insurance or credit disability insurance on which such charges to the debtor are payable by other than a single sum and of level term credit life insurance shall be not less than the pro rata gross unearned amount charged;
(b) The refund of an unearned amount paid by or charged to the debtor for insurance in the case of reducing term credit life insurance or of reducing credit disability insurance on which the insurance charges to the debtor axe paid in a single sum shall be not less than the amount computed by the “Sum of the Digits” formula, commonly known as the “Rule of 78”.
10.2 Each debtor is entitled to receive from the person or persons legally responsible for paying it, a refund of unearned identifiable insurance charges on termination of insurance in cash or by credit against the next installment on his account in accordance with the insurer's approved refund formula. Insurers shall be responsible for the establishment of procedures by which refunds or credits are to be made and shall furnish to the creditors schedules of refunds or credits, conforming with the requirement hereof, to be made in the event of termination of insurance. Insurers shall also furnish instructions to creditors with respect to their duties and functions in the making of such refunds or credits.
10.3 The requirement for filing refund formulas will be considered met if they are set forth in the individual policy or group policy filed with the Commissioner and not disapproved. If the appropriate refund formula is the “Sum of the Digits” formula, commonly known as the “Rule of 7811, it shall be sufficient to so refer to it.
10.4 A premium refund or credit need not be made if the amount thereof is two dollars or less.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 054.00.12-10, AR ADC 054.00.12-10
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