1998 Minnesota Statutes

     62B.04 Amount of credit life insurance and credit 
  accident and health insurance. 

    Subdivision 1.    Credit life insurance.  (1) The 
 initial amount of credit life insurance shall not exceed the 
 amount of principal repayable under the contract of indebtedness 
 plus an amount equal to one monthly payment.  Thereafter, if the 
 indebtedness is repayable in substantially equal installments 
 according to a predetermined schedule, the amount of insurance 
 shall not exceed the scheduled indebtedness plus one monthly 
 payment or actual amount of indebtedness, whichever is greater.  
 If the contract of indebtedness provides for a variable rate of 
 finance charge or interest, the initial rate or the scheduled 
 rates based on the initial index must be used in determining the 
 scheduled amount of indebtedness and subsequent changes to the 
 rate must be disregarded in determining whether the contract is 
 repayable in substantially equal installments according to a 
 predetermined schedule. 

    (2) Notwithstanding clause (1), the amount of credit life 
 insurance written in connection with credit transactions 
 repayable over a specified term exceeding 63 months shall not 
 exceed the greater of:  (i) the actual amount of unpaid 
 indebtedness as it exists from time to time; or (ii) where an 
 indebtedness is repayable in substantially equal installments 
 according to a predetermined schedule, the scheduled amount of 
 unpaid indebtedness, less any unearned interest or finance 
 charges, plus an amount equal to two monthly payments.  If the 
 credit transaction provides for a variable rate of finance 
 charge or interest, the initial rate or the scheduled rates 
 based on the initial index must be used in determining the 
 scheduled amount of unpaid indebtedness and subsequent changes 
 in the rate must be disregarded in determining whether the 
 contract is repayable in substantially equal installments 
 according to a predetermined schedule. 

    (3) Notwithstanding clauses (1) and (2), insurance on 
 educational, agricultural, and horticultural credit transaction 
 commitments may be written on a nondecreasing or level term plan 
 for the amount of the loan commitment. 

    (4) If the contract of indebtedness provides for a variable 
 rate of finance charge or interest, the initial rate or the 
 scheduled rates based on the initial index shall be used in 
 determining the scheduled amount of indebtedness, and subsequent 
 changes to the rate shall be disregarded in determining whether 
 the contract is repayable in substantially equal installments 
 according to a predetermined schedule. 

    Subd. 2.    Credit accident and health insurance.  The 
 total amount of periodic indemnity payable by credit accident 
 and health insurance in the event of disability, as defined in 
 the policy, shall not exceed the aggregate of the periodic 
 scheduled unpaid installments of the indebtedness; and the 
 amount of each periodic indemnity payment shall not exceed the 
 original indebtedness divided by the number of periodic 
 installments.  If the credit transaction provides for a variable 
 rate of finance charge or interest, the initial rate or the 
 scheduled rates based on the initial index must be used in 
 determining the aggregate of the periodic scheduled unpaid 
 installments of the indebtedness. 

    Subd. 3.    Credit involuntary unemployment insurance.  
 The total amount of periodic indemnity payable by credit 
 involuntary unemployment insurance in the event of involuntary 
 unemployment shall not exceed the aggregate of the periodic 
 scheduled unpaid installments of the indebtedness; and the 
 amount of each periodic indemnity payment shall not exceed the 
 original indebtedness divided by the number of periodic 
 installments. 

    HIST: Ex1967 c 2 s 4; 1977 c 382 s 3; 1982 c 424 s 13; 1989 c 
 330 s 22; 1993 c 343 s 11; 1995 c 171 s 66,67; 1995 c 202 art 2 
 s 25; 1996 c 414 art 1 s 29; 1997 c 157 s 56