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arranged financing. Berger received gross income from dealer-
arranged financing of $261,926.
Virtually all new motor vehicle dealers in Michigan and
other states offer credit life and disability insurance (credit
insurance) to their customers who buy vehicles with dealer-
arranged financing. Credit insurance is also available from
banks, credit unions, and other lenders. Credit insurance is
available to installment buyers under the age of 70 years without
a physical examination, provided the buyer's answers to a health
questionnaire are satisfactory.
To purchase credit disability insurance, the buyer must be
actively employed and not on leave at the time of application for
the insurance. Benefits from the credit insurance policies, in
the event of disability or death, are payable to the financial
institution that holds the installment sale purchase agreement,
not the buyer. Benefits that exceed the outstanding
indebtedness, if any, are payable to the second beneficiary or
the estate of the buyer. Disability payments are prorated for
each day the buyer is disabled and paid to the creditor up to a
maximum of the full monthly vehicle installment payment. Only
the buyer, not any co-obligor, is eligible for disability
insurance.
Credit life and credit disability programs are written as
group policies in which the buyer enrolls, rather than as
individual policies. The group policy is issued to the dealer.
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Last modified: May 25, 2011