NAFCU Services Blog

Nov 06, 2018 by Securian

Hope for the Best, Prepare for the Worst: Credit Insurance & Debt Protection

The adage goes, “Hope for the best, but prepare for the worst.” While you can never predict what challenges your members might face, you can protect them—even in the event of a serious illness. The first step to protecting your members is making sure they’re educated:

  • One in four 20-year-olds will experience a long-term disability before they retire.1
  • The average length of a long-term disability claim is 34.6 months.2
  • Short-term disabilities (lasting six months or less) affect 5.6% of working Americans each year.3
  • More than a third (69%) of Americans have less than $1,000 in their savings account to cover an unexpected event.4
  • Although Social Security Disability Insurance (SSDI) can help alleviate some of the financial burden, it may not be enough. As of May 2018, the average SSDI benefit was $1,063 a month.5

As a credit union, you want to help members achieve their financial goals. You’re also looking for the assurance that the loans you approve will be paid back.

Consider credit insurance and debt protection programs for your members. These solutions could be vital if an illness or injury wreaks havoc on their monthly budget—or worse, life savings or other assets. Offering credit life or credit disability insurance helps borrowers who are taking out a consumer loan prepare for the unexpected and safeguard their future. If the unimaginable happens, they don’t have to worry. And neither do you. For more information about credit insurance and debt protection, watch the webinar "Fulfilling a Need – The Value of Payment Protection."

Understand the Difference

Credit Insurance: Credit life insurance can reduce or pay off the insured balance on a loan if they die. Credit disability insurance can pay loan payments, up to the contract limit, if they become ill or disabled and unable to work.

Debt Protection: Debt protection is a lending program that cancels some or all of the borrower’s loan if they die. It also cancels the borrower’s monthly payment up to stated amounts if the borrower becomes disabled or involuntarily unemployed.

Both options can help protect members and their loved ones. Additionally, credit insurance and debt protection both help ensure that the loan is protected and doesn’t end up in default. The premiums are based on the loan amount. The eligibility process is simple; it’s available for those up to age 65 (70 in some states) with potential eligibility statements, and members can apply when they’re applying for a loan.

Give your members the right tools to keep their finances sound, despite life’s unexpected setbacks. And enjoy the peace of mind that you and your members are prepared, no matter what.

For more information about the differences between credit insurance and debt protection, along with the benefits of payment protection, sign up for this upcoming webinar, "Fulfilling a Need – The Value of Payment Protection."

1 Social Security Administration, “Disability and Death Probability Tables for Insured Workers Born in 1997,” Table A, June 2018, https://www.ssa.gov/oact/NOTES/ran6/an2017-6.pdf.
2 Council for Disability Awareness, March 2018, http://disabilitycanhappen.org/disability-statistic/.
3 Integrated Benefits Institute, Health and Productivity Benchmarking 2016 (released November 2017), Short-Term Disability, All Employers. Group average for new claims per 100 covered lives, https://www.ibiweb.org/benchmarking/.
4 Council for Disability Awareness, Paycheck Protection for Millennials; 2016, blog.disabilitycanhappen.org/protect-your-lifestyle.
5 Social Security Administration, Monthly Statistical Snapshot, May 2018, https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/#table2

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