RULE 10.11B - ELECTRONIC FUNDS TRANSFER PLAN
The purpose of the Electronic Funds Transfer Plan is to provide a convenient premium payment plan with automatic withdrawals from the policyholder's account with a participating financial institution. This payment plan is not available for a mortgagee paying the premium for a policyholder.
1) Definitions
The terms used in this rule are defined as follows:
A. Carryover - any outstanding balance remaining at the end of the previous policy period provided it exceeds the waiver of premium amount.
B. Accumulated Credit - any credit adjustment.
C. Remaining Payments - number of months in the policy period minus the number of Monthly Premiums paid during the policy period to date.
D. Monthly Premium (initial payment only) - sum of the policy period premium divided by the number of months in the policy period less any Accumulated Credit.
E. Monthly Premium (subsequent payments only) - total outstanding balance divided by the number of Remaining Payments less any Accumulated Credit.
F. Payment Plan Deposit (new business only) - 2 Monthly Premiums plus the Transaction Fee. If payment is made by Electronic Funds Transfer and the application is submitted at least 30 days prior to policy effective date, the Payment Plan Deposit is 1 monthly premium plus the Transaction Fee.
G. Payment Plan Deposit (previously insured only) - 2 Monthly Premiums plus the Transaction Fee plus any Carryover less any Accumulated Credit.H. Transaction Fee - the fee to a policyholder for making payments under the Electronic Funds Transfer Plan.
2) Transaction Fee
The Transaction Fee is $1. It will apply to each electronic funds transfer payment.
3) Establishing Electronic Funds Transfer Plan
A. New Business
The applicant completes the Electronic Funds Transfer Preauthorization Agreement (Form #5860) and pays the Payment Plan Deposit with the application. Monthly Premiums will be deducted from their account each month beginning approximately 60 days after the effective date until the premium is paid in full.
If the application was submitted at least 30 days in advance with only 1 Monthly Premium, deductions will begin 30 days after the effective date.
Monthly Premiums will be deducted from their account until the policy is cancelled or the Electronic Funds Transfer Plan is terminated.
The Monthly Premium will be adjusted to include policy changes as they occur. Credits will be applied immediately and debits will be spread among the Remaining Payments.
The balance due for the policy period may be paid in full at any time at the option of the policyholder.
B. Existing Business - Renewals
The Electronic Funds Transfer Plan may be established upon renewal of an existing policy. The insured completes the Electronic Funds Transfer Preauthorization Agreement (Form #5860) which is forwarded with a RFC requesting the change in billing plan to the Customer Care Department. These forms must be received at least 10 days prior to the renewal date. Monthly Premiums will be deducted from their account until the policy is cancelled or the Electronic Funds Transfer Plan is terminated.
The Monthly Premium will be adjusted to include policy changes as they occur. Credits will be applied immediately and debits will be spread among the Remaining Payments.
The balance due for the policy period may be paid in full at any time at the option of the policyholder.
C. Existing Business - Mid Term
The Electronic Funds Transfer Plan may be established during the policy period by changing the payment plan from the Quarterly Payment Plan by RFC.
The insured completes the Electronic Funds Transfer Preauthorization Agreement (Form #5860). This is forwarded with a RFC requesting the change in billing plan to the Customer Care Department. The forms must be received at least 10 days prior to the next quarterly payment due date. Once a 10 day Notice of Cancellation for non-payment of premium is issued, the payment plan CANNOT be changed to the Electronic Funds Transfer Plan for the payment.
The balance due on the policy will be divided by the number of remaining months in the policy period. That Monthly Premium will be deducted from their account until the next renewal period. Upon renewal, a recalculated Monthly Premium will be deducted from their account until the policy is cancelled or the Electronic Funds Transfer Plan is terminated.
4) Payment Schedule
A payment schedule will be indicated on the Declarations Certificate and will include the following information:
A. Amount of withdrawals from the account
B. Approximate date of each withdrawal
C. Transaction fee included in withdrawal
5) Cancellation for Non-Payment of Premium
If notice is received from a financial institution that sufficient funds are not available for the Monthly Premium, the Electronic Funds Transfer Plan will be terminated and the payment plan will be changed to the Quarterly Payment Plan. A 10 day Notice of Cancellation will be sent to the policyholder. Payment of the amount due on the Notice of Cancellation must be received by the date and time indicated or the policy is lapsed and coverage is terminated.
All earned premium is calculated on a pro-rata basis.
6) Terminating Electronic Funds Transfer Plan
The Electronic Funds Transfer Plan may be terminated by the policyholder at any time. The following circumstances will cause the termination of the Electronic Funds Transfer Agreement:
A. Notice from the financial institution that sufficient funds are not available for debit to cover the Monthly Premium.
B. The account at the financial institution is closed or transferred to a different number.
C. The policy is cancelled or rewritten.
