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Unformatted text preview: nsing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 10: REGULATION OF LOAN BROKERAGE
INSURANCE LIMITATIONS “CREDIT LIFE” AND “CREDIT DISABILITY” INSURANCE
This insurance pays off the loan if the insured dies and makes the payments if the Insured become disabled. This type of insurance cannot be required as a condition for making the loan. However, the licensee may, with the borrower's consent, provide credit life and disability insurance through licensed insurance agents. Coverage may not be in an amount in excess of that reasonably necessary to discharge the obligation of the borrower. The form and rate must be approved by the Insurance Commissioner. The term of the policy may not exceed the length of the loan. The broker may not require as a condition of the loan, that the borrower purchase credit life insurance or credit disability insurance. business and Professions Code 10241.1)
However, the lender can insist for self–protection and by the terms of the trust deed that fire and hazard insurance be obtained on improved property until the loan has been repaid. If licensed to sell such insurance, the loan broker may also act as the insurance agent for the borrower, but borrowers are not obligated to purchase the coverage through the mortgage loan broker. They may purchase insurance from their own insurance agent. If the borrower elects to purchase such insurance coverage it must be in a form approved by the insurance commissioner and may not be in an amount in excess of what is required to pay off the loan. The licensee can only collect one premium on the loan even when there are multiple borrowers (only one borrower may be insured unless another borrower's wages are necessary to make the payments). The licensee can collect the cost of fire and hazard insurance if the policy is payable to the borrower and it is sold at a standard rate through a licensed agent. If insurance premiums are to be paid from the proceeds of this loan, the premium am...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10