806 KAR 19:040.

Extinguishment of debt; options.

 

      RELATES TO: KRS

304.19-060, 304.19-070

      STATUTORY AUTHORITY:

KRS 304.2-110

      NECESSITY, FUNCTION,

AND CONFORMITY: KRS 304.2-110 provides that the Executive Director of

Insurance may make reasonable rules and regulations necessary for or as an aid

to the effectuation of any provision of the Kentucky Insurance Code. This administrative

regulation provides the debtor a choice, when a debt extinguished which is

covered by any type of credit insurance, to retain the insurance coverage or to

receive a pro rata return of the premium.

 

      Section 1. In the

event of extinguishment of a debt by prepayment wherein the credit transaction

is secured by any type of credit insurance, and the debt is not renewed or

refinanced, termination of such insurance is not required, and may, at the

option of the debtor, continue for the benefit of the secondary beneficiary.

The agent shall, within ten (10) days of the extinguishment of the debt, notify

the debtor of the debtor's option to continue the insurance or receive a pro

rata return of the premiums.

 

      Section 2. In the

event the debtor elects to continue such insurance in force, the agent shall

give written notice to the insurer within ten (10) days of the date the debtor

makes his election, that the debt is extinguished and that the insurance is to

remain in force for the benefit of the secondary beneficiary. (1-19.04; 1 Ky.R.

1084; eff. 7-2-75; TAm eff. 8-9-2007.)