KRS 304.16-040: Debtor groups.

The lives of a group of individuals may be insured under a policy issued to a creditor or

its parent holding company, or to a trustee or trustees or agent appointed by two (2) or

more creditors, which creditors, holding company, affiliate, trustee, trustee s, or agent

shall be deemed the policyholder, to insure debtors of the creditor, subject to the

following requirements:

(1) The debtors eligible for insurance under the policy shall be all of the debtors of the

creditor or creditors, or all of any class or classes thereof.

(2) The policy may provide that the term "debtors" shall include:

(a) Borrowers of money or purchasers or lessees of goods, services, or property

for which payment is arranged through a credit transaction;

(b) The debtors of one (1) or more subsidiary corporations; and

(c) The debtors of one (1) or more affiliated corporations, proprietorships, or

partnerships if the business of the policyholder and of such affiliated

corporations, proprietorships, or partnerships is under common control.

(3) The premium for the policy shall be paid by the policyholder, either from the

creditor's or creditors' funds, or from charges collected from the insured debtors, or

from both. A policy on which no part of the premium is to be derived from the

funds contributed by insured debtors specifically for their insurance shall insure all

eligible debtors, or all except any as to whom evidence of individual insurability is

not satisfactory to the insurer.

(4) The amount of the insurance on the life of any debtor s hall at no time exceed the

greater of the scheduled or actual amount of the unpaid indebtedness to the creditor,

except that insurance written in connection with open -end credit having a credit

limit exceeding ten thousand dollars ($10,000) shall be in an amount not exceeding

the credit limit.

(5) The insurance shall be payable to the creditor or any successor to the right, title, and

interest of the creditor. Such payment shall reduce or extinguish the unpaid

indebtedness of the debtor to the extent of suc h payment and any excess of the

insurance shall be payable to the estate of the insured.

(6) Notwithstanding the provisions of this section, insurance on agricultural credit

transaction commitments may be written up to the amount of the loan commitment

on a nondecreasing or level term plan, and insurance on educational credit

transaction commitments may be written up to the amount of the loan commitment

less the amount of any repayments made on the loan.