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= Consumer Credit Insurance = Consumer credit insurance (CCI), credit insurance or trade credit insurance is an insurance, a kind of payment protection, that provides some repayment of loans, credit cards or debt for the policy holders to the private insurance company, financial company or bank when policy holder is getting sick, getting injured, dead or losing jobs. Also, consumer credit insurance is an important tool to manage risk. However, this insurance helps insurers to pay the cover in these two situations sometimes. These situations happen when insurers have credit card fraud or the items bought were damaged. Nevertheless, the insurance benefit will be paid to the account payable after the policy claims by a lump sum or installment. Nowadays, consumer credit insurance has become a kind of significant payment protection for individuals.

Characteristics
In the past, consumer credit insurance could be classified into two types of insurances, including credit life insurance, credit accident and health insurance. Firstly, the characteristics of credit life insurance were that it fitted for individuals and groups. It was required that everyone should have medical examinations before applying for insurance. Moreover, there was a maximum age in requirements. Nevertheless, individuals could join in groups in the companies and then the requirements changed. The preconditions did not conclude physical examination and maximum age in groups. It depended on the loyalty of their own companies. Lastly, the cost of credit life insurance decreased with the fall of the amount of unpaid loan.

For credit accident and health insurance, some characteristics were same as credit life insurance. They both fitted the individuals and groups and was sold in same institution. However, in credit accident and health insurance, policy holders could choose insurance benefit to be paid during the disability or until the maturity date of loan. Furthermore, the requirements were stricter than credit life insurance. If the applicants had existing illnesses, insurance companies would not approve the applications. If the accident and health insurance was retroactive, individuals could only get the benefits that applicants were disabled for a specific waiting period. Somehow, if the accident and health insurance was nonretroactive, applicants could only get coverage during the disability. In addition, it was hard to control the effective rate as insurance benefit of accident and health insurance was basic.



Development
In 1917, consumer credit insurance is written by the Morris Plan Insurance society for the first time in the United States. The founder of Morris Plan Insurance society Arthur J. Morris created the term. However, Arthur J. Morris also found the Morris Plan Bank. Therefore, the credit life insurance allowed insurers to wrote down a sufficient amount of fund to repay the personal loans before the insurers die at the beginning, because the founder has sufficient capital. With the Revolution and Development, sales of consumer credit insurance increased as the amounts of loan increased. Since 1967, the sales of life credit insurance had reached $67 billion which occupied sixty-seven percent of market. Compared to sales of half of one billion in 1945, credit life insurance had become monopoly in the market. However, the sale volume of credit accident and health insurance rose in recent year as well.

Abuse
As the development of consumer credit insurance, citizens found the loopholes of the insurance. Consequently, the insurance was being abused that individuals would try to defraud money, including excessive insurance, pyramiding of insurance coverages, overcharging, coercion and nonpayment of claims. Therefore, the sales of credit life insurance reached sixty-seven billion in 1967.

Rules and Regulation
In order to avoid abuse, the National Association of Insurance Commissioners(the NAIC) had enacted the first draft, Uniform Consumer Credit Insurance Rules and Regulations,and submitted in 1952. The rule was adopted by NAIC in 1954. However, Uniform Consumer Credit Insurance Rules and Regulations was not widely being accepted as Uniform Consumer Credit Insurance Rules and Regulations did not demonstrate insurance commissioners had the power to regulate the effective rate. Therefore, the new rule of Model Bill was reformed in 1957. Ultimately, insurance commissioners had the authority to control the premium rate that they could reject the applications had the unreasonable premium charges. Even so, most states still had the abusive practices and argued Model Bill was not perfect. Therefore, there were three rules being used in America between 1957 and 1968, including Model Bill, Consumer Credit Protection Act(CCPA) and Uniform Consumer Credit Code(UCCC). Different states used different legislations. However, three legislation made the market chaos and all the states would not reach a consensus. After considering and negotiating in many ways, UCCC was being stated at the National Conference of Commissioners on Uniform Stated Laws in 1968, because UCCC covered the regulation and were concerned about the safety of consumers. Although UCCC is the main legislation of consumer credit insurance in America, Model Bill and CCPA were being used in some states as well.

Reform on amount of insurance benefit
Initially, the policy under UCCC and Model Bill stated that the amount of benefit was limited, and, if the debt is repaid by the installment, the insurance benefit should not beyond the unpaid debt. After reforming, the legislation demonstrated all the insurance benefits should have limited amounts as applicants would not try to fraud money by writing down unreasonable insurance benefits on purpose.

Reform of term
In the past, the term of consumer credit insurance usually went into effect at the first effective date of the loans and regulated the maximum term for fifteen days after the last due day of repayment. However, UCCC and Model Bill had canceled the extension of the term which means maximum term should not exceed the last due day of indebtedness.

Choice on insurance companies
Before the new legislation reformed, the sales of consumer credit insurance were reached approximately seventy billion in 1967. However, UCCC reformed the regulation that individuals who were having debts had power to choose whether to buy the insurance, because it was compulsory to buy in the market in the past. Therefore, individuals could look for different insurance companies once the premium charge or premium rate was unreasonable. Furthermore, there were instances creditors charged higher premium rates to consumers than consumer credit insurance charged by insurance companies to insurers. UCCC condemned the actions to the creditor, therefore, new legislation stated creditor could not charge high effective rate and effective rate should be approved by the insurance commissioner before creditor made the decision.

Overlap
Before 1968, individuals could overlap the consumer credit insurance before scheduled maturity date in order to get as much as insurance benefits. However, new legislation showed that the old consumer credit insurance must be canceled before issuing new consumer credit insurance. Consequently, the unearned premium of the old insurance would be refunded as well.

Conclusion
Since 1968, the market of consumer credit insurance was beginning to the function as the new legislation was enacted and the existence of UCCC, NAIC and CCPA. with the development of consumer credit insurance, other countries started to imitate and launch the product of consumer credit insurance in the insurance market.

Precondition in Australia
If citizens want to apply for consumer credit insurance, there are some requirements. Mostly, private insurance companies and bank have strict constraints on the applicants. In order to decrease the risk of insurance claims and increase the revenue from sales, all the insurance companies will not accept the applicants who are having pre-existing illness, including depression, cancer, heart disease etc. The individuals are most likely to having trouble losing jobs or having symptom causing death. In addition, the rule stated that people who are losing jobs are able to get the repayment does not conclude fractional unemployment, cyclical unemployment, self-employed and part-time job. Therefore, before applying for the consumer credit insurance, applicants should prepare the required materials including medical certificate proving that the individuals do not have any illness and certificate from company proving individuals are full-time employers(NDH, n.d.). However, it is most likely to be rejected if the individuals have difficulties in the business as well.

Consumer Credit Insurance in Australia
In Australia, consumer credit insurance could be partitioned into two types, which is Loan Cover Insurance and Five-Year Mortgage Protection Insurance. For Loan Cover Insurance, this insurance only available for applicants who is a permanent resident of Australia and age from 16 to 60 years old(Beyond Bank, n.d.). The insurance benefit for Loan Cover Insurance is ranging between $5000 and $80,000. However, individuals could get maximum $80,000 for a lump sum if the policy holder is dead or having terminal illness. At the same time, if applicants would like to be paid by installment the cover period is only 120 days and maximum cover is $10,000 each policy period. Individuals could choose lump sum in one time as well. In addition, Loan Cover Insurance still work if people purchase Loan Cover Insurance more than one time. Theoretically, the cover would increase. Last but not least, Loan Cover Insurance has a cooling off period, policy holder has right to cancel and get the refund of premium in 30 days.

Five-Year Mortgage Protection Insurance is another kind of consumer credit insurance which only supplied to Australian resident and the age ranging from 16 to 60 years old as well. The maximum cover for Five-Year Mortgage Protection Insurance is $750,000. By the way, the individuals who are dead or have terminal illness could get maximum cover. There is no minimum cover for Five-Year Mortgage Protection Insurance. Furthermore, the cover period for installment is 120 days with maximum $3,000 per claim or maximum $10,000 in one policy period except for special condition. The special condition is that cover period of applicants had disability could be extended to 24 months. In addition, there is a cooling period of 30 days as well.

Claim on Consumer Credit Insurance in Australia
Policy holders could follow instructions of claiming the insurance and get the insurance benefit accordingly once individuals encounter the difficulties and the condition belongs to insurance coverage. Firstly, applicants are supposed to contact the insurers to talk about the encountered conditions and claim the insurance. Beside, policy holder needs to prepare a certificate of the hospital that state the applicant is not able to work for permanent or a period of time. Then the insurers will deal with the issue and help the applicant to pay the repay once the claim is approved. After contacting the insurers, the individual should contact the finance provider to postpone repayment period if the person is having financial hardship or emergency. On the whole, postponing recovery action would relieve the stress before the policy approved.

Critical Analysis
In reality, selling consumer credit insurance is a way of protecting bank or finance provider as the insurance company would help policy holder to repay the debt. Although insurers have the obligation to pay the repayment if the applicants claim, the another parties, insurers, make profits as well due to the low percentage of insurance claim. Buying consumer credit insurance is a way to relieve the burden as younger generations start to work harder and work overtime as individuals apply for loans to buy cars or houses. Moreover, normally most people will buy the insurance when they are buying real estate as individuals are going to be stressed out after having a huge amount of loan. In fact, the price of CCI is 0.1% to 0.3% of the total amount of loan. Compared to CCI, the price of private mortgage insurance is quite high which is 0.5% to 1% of entire loan annually. Nonetheless, the price of private mortgage insurance is unacceptable for younger generations. Also, the figure showed that citizens in America spend $13,000 on private mortgage insurance on average per year. Therefore, the people who just started working or had a small amount of loan would rather consider the CCI. In addition, consumer credit insurance makes differences in international deals. International sales would be much faster with the development of consumer credit insurance and dealer will not worry about the delay due to another parties with a letter of credit anymore.