Administrative Code

Virginia Administrative Code
Title 10. Finance and Financial Institutions
Agency 5. State Corporation Commission
2/21/2019

Chapter 70. Sale of Noncredit-Related Life Insurance in Consumer Finance Offices

10VAC5-70-10. Legal compliance.

All governing state and federal laws shall be observed.

Statutory Authority

§ 6.2-1535 of the Code of Virginia.

Historical Notes

Derived from VR225-01-0607 § 1, eff. July 1, 1995.

10VAC5-70-20. Separation of lending and insurance sales.

No loan or extension of credit by the consumer finance licensee, or any affiliate conducting business in the licensee's office, shall be conditioned upon the purchase of noncredit-related life insurance. If a person expresses an interest in obtaining a loan or extension of credit from the consumer finance licensee, or from any affiliate conducting business in the licensee's office, the sale of noncredit-related life insurance to such person shall not be solicited until a credit decision is made, the customer is informed of that decision, and an entry showing such decision is made in the lender's books. Interest rates and other charges may not be conditioned upon the purchase of such insurance. The customer shall be given the option of paying the premium for such insurance with his own funds, or with a portion of a loan or extension of credit made to the customer. Such insurance may not be solicited or sold unless the loan or extension of credit made contemporaneously therewith exceeds $1,000 exclusive of premiums for such insurance. The total of the premium for such insurance plus the premiums for all other insurance connected with the loan or credit transaction shall not exceed 45% of the principal amount of the loan or credit transaction excluding insurance purchased by the creditor after the loan or credit transaction is closed because of the customer's failure to maintain lawfully required insurance on collateral.

Statutory Authority

§ 6.2-1535 of the Code of Virginia.

Historical Notes

Derived from VR225-01-0607 § 2, eff. July 1, 1995; amended, Virginia Register Volume 14, Issue 14, eff. March 10, 1998.

10VAC5-70-30. Purchaser's right to cancel insurance.

Any person who purchases noncredit-related life insurance solicited in a consumer finance office shall have a right to cancel such purchase and receive a full premium refund until midnight of the 30th day after receipt of a policy or the effective date of coverage, whichever is later. The person soliciting the sale of such insurance shall clearly and conspicuously disclose to the customer, prior to the consummation of the insurance purchase, his right to cancel and shall provide the customer at that time with a form in duplicate by which the right to cancel may be exercised by mailing or delivering the form and policy to the consumer finance licensee or to the insurance company. Such form shall be signed by the borrower, shall be subject to prior commission approval and shall clearly and conspicuously state:

1. That purchase of such insurance is not a condition of any loan or extension of credit.

2. That interest rates and charges do not depend upon the purchase of such insurance.

3. That the customer has the option to pay the insurance premium from his own funds, or to pay the premium with a portion of loan proceeds.

4. That if the customer elects to finance the premium, interest will be charged on the financed premium at the same rate as applies to the loan.

5. If the insurer and creditor are affiliated, that they are affiliated and each expects to profit from the sale of such insurance.

6. The face amount, premium and policy term of such insurance.

7. A comparison of monthly payment, finance charge and total of payments with and without such insurance.

8. That the customer may cancel such insurance by mailing a copy of the notice, together with the policy, to the consumer finance licensee or the insurance company within 30 days after receipt of the policy.

9. That in the event of cancellation, the customer will be promptly refunded the entire premium for such insurance.

10. The name and address of the consumer finance licensee.

11. The name and address of the insurance company.

12. The name, address and telephone number for making complaints to the Bureau of Financial Institutions.

Statutory Authority

§ 6.2-1535 of the Code of Virginia.

Historical Notes

Derived from VR225-01-0607 § 3, eff. July 1, 1995; amended, Virginia Register Volume 14, Issue 14, eff. March 10, 1998.

10VAC5-70-40. Compliance with insurance laws.

Persons soliciting the sale of noncredit-related life insurance in licensed consumer finance offices shall be licensed to do so, as required under Virginia insurance laws. The underwriter and selling company of noncredit-related life insurance sold in licensed consumer finance offices shall be authorized to transact the insurance business, as required under Virginia insurance laws.

Statutory Authority

§ 6.2-1535 of the Code of Virginia.

Historical Notes

Derived from VR225-01-0607 § 4, eff. July 1, 1995.

10VAC5-70-50. Examination of records.

The Bureau of Financial Institutions shall be given access to the books and records of the insurance sales business conducted under this chapter and be furnished such information as it may need in order to ensure that these conditions are being observed. Noncredit-related life insurance sales records shall be maintained for a period of three years after sale. Such records shall include, but not be limited to, worksheets or the like containing factors and/or calculations used to determine how much life insurance the customer may need or want, disclosure documents containing the customer's acknowledgment of receipt and specimens of policies sold.

Statutory Authority

§ 6.2-1535 of the Code of Virginia.

Historical Notes

Derived from VR225-01-0607 § 5, eff. July 1, 1995; amended, Virginia Register Volume 14, Issue 14, eff. March 10, 1998.

10VAC5-70-60. Effect of chapter.

This chapter supersedes all prior authorizations and rules governing the sale of noncredit-related life insurance in consumer finance offices.

Statutory Authority

§ 6.2-1535 of the Code of Virginia.

Historical Notes

Derived from VR225-01-0607 § 6, eff. July 1, 1995.



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