A lender cannot offer prepaid single-premium credit life, disability, or unemployment insurance with a home loan unless the applicant gets the required notice in time.
Sec. 343.104. RESTRICTIONS ON SINGLE PREMIUM CREDIT INSURANCE. A lender may not offer any individual or group credit life, disability, or unemployment insurance on a prepaid single premium basis in conjunction with a home loan unless the following notice is provided to each applicant for the loan by hand delivery or mail to the applicant not later than the third business day after the date the applicant's application for a home loan is received: INSURANCE NOTICE TO APPLICANT You may elect to purchase credit life, disability, or involuntary unemployment insurance in conjunction with this mortgage loan. If you elect to purchase this insurance coverage, you may pay for it either on a monthly premium basis or with a single premium payment at the time the lender closes this loan. If you choose the single premium payment, the cost of the premium will be financed at the interest rate provided for in the mortgage loan. This insurance is NOT required as a condition of closing the mortgage loan and will be included with the loan only at your request. You have the right to cancel this credit insurance once purchased. If you cancel it within 30 days of the date of your loan, you will receive either a full refund or a credit against your loan account. If you cancel this insurance at any other time, you will receive either a refund or credit against your loan account of any unearned premium. YOU MUST CANCEL WITHIN 30 DAYS OF THE DATE OF THE LOAN TO RECEIVE A FULL REFUND OR CREDIT. To assist you in making an informed choice, the following estimates of premiums are being provided along with an example of the cost of financing. The examples assume that the term of the insurance product is ____ years and that the interest rate is ______ percent (a rate that has recently been available for the type of loan you are seeking). PLEASE NOTE THAT THE ACTUAL LOAN TERMS YOU QUALIFY FOR MAY VARY FROM THIS EXAMPLE. "Total amount paid" is the amount that would be paid if you financed only the total insurance premium for a ___ year period and is equal to the amount you would have paid if you made all scheduled payments. This is NOT the total of payments on your loan. CREDIT LIFE INSURANCE: Estimated premium of $_______ DISABILITY INSURANCE: Estimated premium of $_______ INVOLUNTARY UNEMPLOYMENT INSURANCE: Estimated premium of $________ TOTAL INSURANCE PREMIUMS: $_______ TOTAL AMOUNT PAID: $_______ Added by Acts 2001, 77th Leg., ch. 622, Sec. 1, eff. Sept. 1, 2001.