North Carolina General Statutes 58-57-50. Premium refunds or credits
Terms Used In North Carolina General Statutes 58-57-50
- Credit accident and health insurance: means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction as defined in N. See North Carolina General Statutes 58-57-5
- Credit life insurance: means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction as defined in N. See North Carolina General Statutes 58-57-5
- Creditor: means any lender of money or vendor or lessor of goods, services, property, rights or privileges, including any person that directly or indirectly provides credit in connection with any such sale or lease, for which payment is arranged through a credit-related transaction; or any successor to the right, title or interest of any such lender, vendor, lessor, or person extending credit, and an affiliate, associate, or subsidiary of any of them, or any director, officer, or employee of any of them or any other person in any way associated with any of them. See North Carolina General Statutes 58-57-5
- Debtor: means a borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction. See North Carolina General Statutes 58-57-5
- Indebtedness: means the total amount payable for the term of the loan by debtor to creditor in connection with a loan or other credit transaction, including principal, interest, allowable charges, and any premiums authorized hereunder. See North Carolina General Statutes 58-57-5
- property: shall include all property, both real and personal. See North Carolina General Statutes 12-3
(a) Each individual policy or group certificate shall provide that in the event of termination of the insurance prior to the scheduled maturity date of indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly to the person entitled thereto.
(b) The refund of premiums for decreasing term credit life insurance shall be the actuarial method of calculating refunds which produces a refund equal to the original premium multiplied by the ratio of the sum of the remaining insured balances divided by the sum of the original insured balances as of the due date nearest the date of prepayment in full. The refund of premiums for single interest credit property insurance and single interest physical damage insurance shall be equal to the amount computed by the sum of digits formula known as the “Rule of 78.” The refund of premiums for level term credit life insurance and dual interest credit property insurance and dual interest physical damage insurance shall be equal to the pro rata unearned gross premiums.
(c) The refund of premiums in the case of credit accident and health insurance shall be equal to one-half the amount computed by the sum-of-digits formula commonly known as the “Rule of 78” plus one-half the amount of the pro rata unearned gross premium.
In lieu thereof the refund may be computed by the “Pure Premium” method. The refund is computed from the schedule of credit accident and health premiums and is equal to the premium from that schedule which would be charged for such insurance in the amount of the total remaining benefits for the remaining term of the indebtedness outstanding on the date of termination.
(d) No refund need be made if the amount thereof is less than one dollar ($1.00).
(e) If a creditor requires a debtor to make any payment for credit life insurance or credit accident and health insurance and an individual policy or group certificate of insurance is not issued, the creditor shall immediately give written notice to such debtor and shall promptly make an appropriate credit to the account. (1975, c. 660, s. 1; 1981, c. 759, s. 8; 1989, c. 485, s. 7; 2005-181, s. 2.)