Credit Life and Credit Health Insurance

NMSA 1978 ch. 59A, art. 25

in effect

NMSA 1978, § 59A-25-1 Scope and short title

59A-25-1. Scope and short title A. All life insurance and all health insurance in connection with loans or other credit transactions shall be subject to the provisions of this article, except such insurance in connection with a loan or other credit transaction of more than ten (10) years' duration; nor shall insurance be subject to this article where issuance of the insurance is an isolated transaction on part of the insurer not related to an agreement or plan for insuring debtors of the creditor. B. This article [Chapter 59A, Article 25 NMSA 1978] may be cited as the "Law for Regulation of Credit Life Insurance and Credit Health Insurance." Laws 1984, ch. 127, § 473.

NMSA 1978, § 59A-25-2 Purpose

59A-25-2. Purpose The purpose of this article is to promote the public welfare by regulating credit life insurance and credit health insurance. Nothing in this article is intended to prohibit or discourage reasonable competition. The provisions of this article shall be liberally construed. Laws 1984, ch. 127, § 472.

NMSA 1978, § 59A-25-3 Definitions

59A-25-3. Definitions For the purposes of this article: A. "credit life insurance" means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction; B. "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 while the debtor is disabled as defined in the policy; C. "creditor" means the lender of money or vendor or lessor of goods, services or property, rights or privileges for which payment is arranged through a credit transaction, or any successor to the right, title or interest of any such lender, vendor or lessor, 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; D. "credit transaction" includes loans, purchases and leases in which the debtor or his successor in interest become liable for the payment of the indebtedness in one or more payments to the creditor; E. "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; and F. "indebtedness" means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction. Laws 1984, ch. 127, § 474.

NMSA 1978, § 59A-25-4 Forms of credit life, credit health insurances

59A-25-4. Forms of credit life, credit health insurances Credit life insurance and credit health insurance shall be issued only in the following forms: A. individual policies of life insurance issued to debtors on the term plan; B. individual policies of health insurance issued to debtors on a term plan or disability benefit provisions in individual policies of credit life insurance; C. group policies of life insurance issued to creditors providing insurance upon the lives of debtors on the term plan; and D. group policies of health insurance issued to creditors on a term plan insuring debtors or disability benefit provisions in group credit life insurance policies to provide such coverage. Laws 1984, ch. 127, § 475.

NMSA 1978, § 59A-25-5 Amount of insurance

59A-25-5. Amount of insurance A. The initial amount of credit life insurance shall not exceed the total amount repayable under the contract of indebtedness and, where an indebtedness is repayable in substantially equal installments, the amount of insurance shall at no time exceed the scheduled or actual amount of unpaid indebtedness, whichever is greater. B. Notwithstanding the provisions of Subsection A, above, insurance on agricultural credit transactions and other credit transactions not providing for amortization of the indebtedness and not exceeding two (2) years in duration may be written up to the amount of the loan commitment on a nondecreasing or level term plan. C. Notwithstanding the provisions of Subsection A, above, or any other provision of this article, insurance on educational credit transaction commitments may be written for the amount of the portion of such commitment that has not already been advanced by the creditor. D. The total amount of periodic indemnity payable by credit health insurance in 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. Laws 1984, ch. 127, § 476.

NMSA 1978, § 59A-25-6 Term of insurance

59A-25-6. Term of insurance The term of any credit life or credit health insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, or the date when the debtor applies for such insurance, whichever is later, except that where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to such indebtedness shall commence on the effective date of the policy. Where evidence of insurability is required and such evidence is furnished more than thirty (30) days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurer determines the evidence to be satisfactory, and in such event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance. The term of such insurance shall not extend more than fifteen (15) days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor. If the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness. In all cases of termination prior to scheduled maturity, a refund shall be paid or credited as provided in Section 480 [59A-25-9 NMSA 1978] of this article. Laws 1984, ch. 127, § 477.

NMSA 1978, § 59A-25-7 Provisions of policies and certificates; disclosure to debtors

59A-25-7. Provisions of policies and certificates; disclosure to debtors A. All credit life insurance and credit health insurance shall be evidenced by an individual policy, or in the case of group insurance by a certificate of insurance, which individual policy or group certificate of insurance shall be delivered to the debtor. B. Each such individual policy or group certificate shall, in addition to other requirements of law, set forth the name and home office address of the insurer, the name or names of the debtor or in the case of a certificate under a group policy, the identity by name or otherwise of the debtor, the premium or amount of payment, if any, by the debtor separately for credit life insurance and credit health insurance, a description of the coverage including the amount and term thereof and any exceptions, limitations and restrictions, and shall state that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate, and provide for refund of premiums as required by Section 480 [59A-25-9 NMSA 1978] of this article. C. The individual policy or group certificate shall be delivered to the insured debtor at the time the indebtedness is incurred except as hereinafter in this section provided. D. If the individual policy or group certificate is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for such policy or a notice of proposed insurance, signed by the debtor and setting forth the name and home office address of the insurer, the name or names of the debtor, the premium or amount of payment by the debtor, if any, separately for credit life insurance and credit health insurance, the amount, term and a brief description of the coverage provided, shall be delivered to the debtor at the time such indebtedness is incurred. The copy of the application or such notice of proposed insurance shall also refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required by this subsection is prominently set forth therein. Upon acceptance of the insurance by the insurer and within thirty (30) days of the date upon which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate to be delivered to the debtor. The application or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance shall become effective as provided in Section 477 [59A-25-6 NMSA 1978] of this article. E. If the named insurer does not accept the risk, then the debtor shall receive a policy or certificate of insurance setting forth the name and home office address of the substituted insurer and the amount of the premium to be charged, and if the amount of premium is less than that set forth in the notice of proposed insurance an appropriate refund shall be made. Laws 1984, ch. 127, § 478.

NMSA 1978, § 59A-25-8 Filing, approval and withdrawal of forms

59A-25-8. Filing, approval and withdrawal of forms A. All policies, certificates of insurance, notice of proposed insurance, applications for insurance, endorsements and riders delivered or issued for delivery in this state and the schedules of premium rates pertaining to them shall be filed by the insurer with the superintendent. B. The superintendent shall, within sixty days after the filing of any such policies, certificates of insurance, notice of proposed insurance, applications for insurance, endorsements and riders, disapprove any form if the benefits provided therein are not reasonable in relation to the premium charge or if it contains provisions that are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of the coverage or that are contrary to a provision of the Insurance Code or of a rule or regulation promulgated thereunder. C. If the superintendent notifies the insurer that the form is disapproved, it is unlawful thereafter for the insurer to issue or use the form. In the notice, the superintendent shall specify the reason for disapproval and state that a hearing will be granted within twenty days after request in writing by the insurer. No such policy, certificate of insurance, notice of proposed insurance, nor any application, endorsement or rider, shall be issued or used until the expiration of thirty days after it has been filed, unless the superintendent gives prior written approval thereto. D. The superintendent may, at any time after a hearing held not less than twenty days after written notice to the insurer, withdraw approval of a form on any ground set forth in Subsection B of this section. The written notice of hearing shall state the reason for the proposed withdrawal. E. The insurer shall not issue the forms or use them after the effective date of withdrawal. F. If a group policy of credit life insurance or credit health insurance has been or is delivered in another state, the insurer shall be required to file only the group certificate and notice of proposed insurance delivered or issued for delivery in this state as specified in Subsections B and D of Section 59A-25-7 NMSA 1978, and the forms shall be approved by the superintendent if they conform with the requirements specified in such subsections and if the schedules of premium rates applicable to the insurance evidenced by the certificate or notice are not in excess of the insurer's schedules of premium rates filed with the superintendent. Laws 1984, ch. 127, § 479; 2017, ch. 130, § 17.

NMSA 1978, § 59A-25-9 Premiums and refunds

59A-25-9. Premiums and refunds A. Any insurer may revise its schedules of premium rates from time to time and shall file such revised schedules with the superintendent. No insurer shall issue any credit life insurance policy or credit health insurance policy for which the premium rate exceeds that determined by the schedules of such insurer as then on file with the superintendent. B. Each individual policy or group certificate shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly to the person entitled thereto; provided, however, that the superintendent shall prescribe a minimum refund and no refund which would be less than such minimum need be made. The formula to be used in computing such refund shall be filed with and approved by the superintendent. C. If a creditor requires a debtor to make any payment for credit life insurance or credit 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. D. The amount charged to a debtor for any credit life or credit health insurance shall not exceed the premiums charged by the insurer, as computed at the time the charge to the debtor is determined. E. Nothing in this article shall be construed to authorize any payments for insurance now prohibited under any statute, or rule thereunder, governing credit transaction. Laws 1984, ch. 127, § 480.

NMSA 1978, § 59A-25-10 Authorized insurer, licensed agent required

59A-25-10. Authorized insurer, licensed agent required A credit life or credit health insurance policy shall be delivered or issued for delivery in this state only by an insurer holding a certificate of authority to transact such insurance in this state, and shall be issued only through a duly appointed and licensed agent of the insurer in this state. Laws 1984, ch. 127, § 481.

NMSA 1978, § 59A-25-11 Claims administration

59A-25-11. Claims administration A. All claims shall be promptly reported to the insurer or its designated claim representative, and the insurer shall maintain adequate claim files. All claims shall be settled as soon as possible and in accordance with the terms of the insurance contract. B. All claims shall be paid either by draft drawn upon the insurer or by check of the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy provisions, or upon direction of such claimant to one specified. C. No plan or arrangement shall be used whereby any person other than the insurer or its designated claim representative shall be authorized to settle or adjust claims. The creditor shall not be designated as claim representative for the insurer in adjusting claims; provided, that a group policyholder may, by arrangement with the insurer, draw drafts or checks in payment of claims due to the group policyholder subject to audit and review by the insurer. Laws 1984, ch. 127, § 482.

NMSA 1978, § 59A-25-12 Existing insurance; choice of insurer

59A-25-12. Existing insurance; choice of insurer When credit life or credit health insurance is required as additional security for any indebtedness, the debtor shall, upon request to the creditor, have the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by him or of procuring and furnishing the required coverage through any insurer authorized to transact such an insurance business in this state. The creditor shall timely inform the debtor in writing of the debtor's rights under this section, in form prescribed or approved by the superintendent. Laws 1984, ch. 127, § 483.

NMSA 1978, § 59A-25-13 Director of financial institutions division to report violations

59A-25-13. Director of financial institutions division to report violations The director of the financial institutions division of this state, in connection with his examination of lending institutions under his supervision, regulation or control, shall investigate and examine the procedures and policies of such lending agencies regarding issue and sale of insurance in connection with loans, and to report immediately to the superintendent any questionable procedures or violations of this article by any such lending agency. Laws 1984, ch. 127, § 484.

NMSA 1978, § 59A-25-14 Penalties

59A-25-14. Penalties In addition to any other penalty provided by law, any person violating the superintendent's order under this article after the order has become final and while the order is in effect, shall upon conviction thereof forfeit and pay to the state of New Mexico not to exceed five hundred dollars ($500), except that if the violation is found to be wilful the penalty shall be in [a] sum not over two thousand dollars ($2,000). Laws 1984, ch. 127, § 485.

Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18562/index.doFetched: 10/20/2026