Credit life insurance
Credit Life Insurance coverage for loans up to a maximum of EC $400,000 has been obtained for the entire Loan Portfolio of the MRECCU.
The Credit Union consists of members who are largely rural and low to middle income individuals, with limited disposable income. As a result, additional monthly insurance premiums plus installments would prove to be burdensome. Therefore, in the true spirit of Co-operatives we undertake this initiative through the collective efforts of all borrowers, by the introduction of financing a Credit Life Portfolio through the payment of a Risk Fee.
Credit life insurance – questions and answers
WHAT IS CREDIT LIFE INSURANCE?
Credit Life Insurance is a type of life insurance policy which is designed to pay off a borrower’s loan or debt if the borrower dies.
HOW DOES IT WORK?
The Credit Union purchases Credit Life Insurance coverage for its entire loan portfolio; thereby protecting the assets of the Credit Union and the members/borrowers against potential loss that may be incurred through loss of life or permanent total disability, allowing the savings and assets of members to remain with loved ones after death, or permanent total disability.
What is the Maximum Benefit of the Credit Union’s Life Insurance Coverage?
The Maximum coverage is EC$400,000.00.
What coverage is offered by the Credit Union’s Life Insurance policy?
The policy offers coverage for Loss of Life and Permanent Total Disability.
What is the maximum entry age to the Credit Union’s Credit Life Insurance coverage?
The maximum coverage age is 70 years.
What is the Benefit?
Payment of 100% of the loan balance up to a maximum of EC $400,000.00, upon death or permanent total disability.
WHAT IS PERMANENT TOTAL DISABILITY?
Permanent total disability is complete disability, where a person is permanently unable to do any kind of work for the rest of his/her life. This can be the loss of use of both hands, both arms, both feet, both legs, both eyes or any two such body parts such as arm and leg.
WILL I BE SUBJECTED TO MEDICALS TO GET COVERAGE UNDER MY CREDIT UNION POLICY?
Yes, you will be required to either complete a health statement, or undergo medicals based on the size of your loan.
What is A Risk Fee?
A Risk Fee is a fee paid to the Credit Union which will cover your loan under its policy instead of you, the member, having to obtain life or credit life insurance with the burden of monthly premiums.
What is the Purpose of The Risk Fee?
The Risk Fee collected allows the Credit Union to purchase the Credit Life Insurance coverage for its entire loan portfolio, thereby providing coverage for all its borrowers.
How much is the Risk Fee?
Every borrower, except for loans secured fully by cash, will be required to pay a fee of 1.2% of the loan applied for. The fee will be applicable every time you apply for a loan or refinance your loan.
Can Persons with Cash Secured Loans pay the Risk Fee?
Although it is optional to cash secured borrowers, it is also advisable as it will allow for their loan to be protected by insurance coverage.
Is The Risk Fee Refundable?
Once paid, the Risk fee is non-refundable.
Will I still need to assign my Life insurance to obtain Certain Loans?
Only if your loan is greater than the coverage given by your Credit Union’s Credit Life Insurance Policy.
How long is my payment valid for?
Risk fee shall become renewable on the fifth anniversary of every loan. The fee shall be based on the outstanding balance of the loan.
ARE THERE EXCLUSIONS & LIMITATIONS TO COVERAGE?
Like all credit life plans there are exclusions and limitations which will be made known to members where applicable.
How Do I pay The Fee?
You can either pay out of pocket (savings account debit), or fee can be taken from proceeds of the loan.
Is The Fee Subject to Change?
Yes, the fee will be subject to periodic review, and increased or decreased as dictated by market conditions.
When must the fee be paid?
The fee MUST be paid PRIOR to disbursement of loan and, where applicable, upon renewal on the 5th anniversary of the date when the loan granted.
What is The Implementation date?
Implementation date is 01 August, 2019.
