Connecticut General Statutes
Chapter 668 - Nondepository Financial Institutions
Section 36a-559. (Formerly Sec. 36-229). - Credit life insurance. Credit accident and health insurance.

(a) Subject to the conditions provided in this section, insurance may be sold to a Connecticut borrower by a licensee at the request of the borrower (1) for insuring the life of persons obligated on a small loan pursuant to sections 38a-645 to 38a-658, inclusive, and (2) providing accident and health insurance covering one person on a small loan pursuant to sections 38a-645 to 38a-658, inclusive. In the case of credit life insurance sold under subdivision (1) of this subsection, the amount of the insurance shall be sufficient to pay the total balance of the loan due on the date of the insured's death. Credit accident and health insurance sold under subdivision (2) of this subsection shall not provide indemnity against the risk of a borrower becoming disabled for a period of less than fourteen days, except that it may provide for retroactive coverage if the disability continues for the period stated in the policy. Irrespective of the number of obligors, only one obligor may be insured, except that life insurance may cover both a borrower and such borrower's spouse where both are obligors on a small loan. A licensee shall not require the purchase of insurance as a condition precedent to the making of a small loan. A licensee shall, both verbally and in writing, inform the borrower prior to entering into any small loan contract of his or her right not to purchase credit insurance. In order to be excluded from the APR calculation, the charge for insurance shall be reasonable, the licensee may not receive any direct or indirect compensation relating to the sale of the insurance and the charge for the insurance may not be paid to an affiliate of the licensee.

(b) If a borrower obtains credit accident and health insurance, the borrower shall have the right to cancel such credit accident and health insurance at any time by giving written notice of cancellation to the licensee. Notification of this right shall be made in the borrower's insurance election. All persons obligated on the loan shall agree, in writing, to the cancellation and return all certificates of insurance. Upon cancellation, the licensee shall, at the licensee's option, either refund the insurance charges to the borrower or apply them to the unpaid balance of the loan.
(c) For the purposes of this section, in the case of an open-end small loan, the additional charge for credit life insurance or credit accident and health insurance shall be calculated in each billing cycle by applying the current monthly premium rate for such insurance, as such rate may be determined by the Insurance Commissioner, to the unpaid balances in the account, using any of the methods for the calculation of loan charges specified in subdivision (4) of subsection (f) of section 36a-558. No credit life insurance or credit accident and health insurance written in connection with an open-end small loan shall be cancelled by the licensee because of delinquency of the borrower in the making of the required minimum payments on the loan unless (1) one or more of such payments is past due for a period of ninety days or more, and (2) the licensee advances to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited from the borrower's account. Any cancellation shall be effective at the end of the billing cycle in which the notice is received and the licensee shall discontinue any further charges for credit accident and health insurance.
(1949 Rev., S. 5940; 1949, S. 2756d; P.A. 84-32, S. 2; P.A. 94-122, S. 261, 340; P.A. 06-35, S. 1; P.A. 16-65, S. 23.)
History: P.A. 84-32 permitted a license to be transferred to cover a place of business located in an adjacent city or town; P.A. 94-122 changed “he” to “the commissioner”, effective January 1, 1995; Sec. 36-229 transferred to Sec. 36a-559 in 1995; P.A. 06-35 required that change in licensee's place of business be in accordance with Sec. 36a-562 and provided that license shall remain in force and effect until expiration, effective May 8, 2006; P.A. 16-65 replaced former provisions with Subsecs. (a) to (c) re credit life, accident and health insurance, effective July 1, 2016.

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