Mortgage Lender's Ability To Offer Insurance
Mass. Gen. Laws chapter 255, section 12G permits creditors to sell group credit life and disability insurance to borrowers in connection with a loan for personal, family or household purposes, provided that the statute's conditions are met. These conditions include: filing a schedule of rates, with the Division of Insurance, for each type of insurance sold; limiting the insurance amount to the greater of the scheduled amount or actual amount owing on the loan, exclusive of unearned finance charges; and providing for a rebate of the insurance premium in the event of prepayment of the loan. In addition, a specific disclosure notice, stating that the borrower cannot be denied credit simply for refusing to purchase insurance, must be provided to the borrower; said section 12G contains the exact language.