(a) Credit disability insurance written pursuant to section 849 may not provide indemnity against the risk that the borrower will become disabled for a period of less than 14 days. The insurance may provide indemnity for any single period of continuous disability of 14 days or longer, after which the risk may become compensable. The insurance may be offered with retroactive coverage to an earlier date based upon the disability having continued for a period stated in the policy, but if insurance with retroactive coverage is offered, it must also be offered without retroactive coverage, and the premium rate for each coverage must be separately stated in writing to the borrower.
(b) If insurance with retroactive coverage is provided, the coverage must provide for a prorated payment based upon the fraction of the month during which the insured is disabled, if the insured is continuously disabled during the waiting period set forth in the policy. If insurance without retroactive coverage is provided, the coverage must provide for a prorated payment based upon the fraction of the month during which the insured is disabled, after first excluding the elimination period set forth in the policy. For the purpose of this subsection, a month is any period of 30 consecutive days.
(c) Credit disability insurance, if made available by a licensee, must be available on a monthly or annual premium basis, and the premium by the month may not exceed a pro rata relationship to the annual premium. Credit disability insurance need not be offered for a period less than the term of the loan to which it is applicable, and no credit disability insurance may be written for a period in excess of the term of the loan to which it is applicable.
(d) The monthly disability benefit payable with respect to an open-end loan may not exceed the monthly payment computed pursuant to section 892 on the outstanding balance at the time disability is incurred.
(e) This section does not apply to any loan of a bona fide principal amount of $50,000 or more, as determined in accordance with section 885.