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CUNA relaunches payment protector rider - Offers $1.5 million in loan coverage

Published:Sunday | April 4, 2010 | 12:00 AM

CUNA Mutual Insurance Society has relaunched what it says is a unique product in its category - a payment protector rider which provides coverage for credit union members who suffer from temporary disability caused by accidents and medical reasons while servicing loans.

The product was first launched in October 2008 but has not sold well because of the recession, said CUNA Country Manager David Wan.

"The take-up was poor due to the downturn. We feel that now that the US economy is picking up, it is time to get back into the market. It is a reintroduction," said Wan.

The product was relaunched March 24 in Kingston before an audience of credit-union managers.

The rider pays $2.75 for every $100 borrowed and covers loan payments for up to 24 months, as long as the disability is medically proven by CUNA Mutual.

The maximum coverage is $1.5 million - up from $1.2 million at introduction - with a maximum loan-repayment term of 10 years, or payments of $50,000 monthly.

Jamaica has 48 credit unions with 950,000 active members.

The agencies together remain a small part of the larger financial sector, worth $55 billion, according to the latest Bank of Jamaica data, $36 billion of which are loans.

Wan says CUNA expects a two per cent take-up in the first two years of the disability rider, but hopes to grow subscription to 25 per cent over time, to match the performance in another regional market, which he did not name.

He says, however, that insurance for permanent disability and death has a 100 per cent take-up as it is offered at no additional cost to borrowers.

In relation to actual claims, Wan said that in the general life insurance industry, claims for health-related policies average 65 per cent of policyholders.


CUNA, which is the primary provider of insurance to local credit unions, has said the claim rate from the sector was among its lowest regionally and that it intended to reward this performance with the payment of cash back to some credit unions in the form of dividends.

Phillipa Beckford, sales and marketing manager for CUNA, says the payment protector rider will in time be expanded to include savings, health insurance, utilities, life insurance and all obligations of the credit union member which are handled through the credit union.

The insurance company, at the rider's relaunch, also reintroduced its life savings insurance, which offers maximum coverage of $1 million and pays out in the event of death or dismemberment.

Savings balances in local credit unions stood at $43.21 billion in September 2009, the most current data available.

Beckford says borrowers who suffer a disability would wait six months or more for payouts while the company tried to determine if the disability was permanent.

Now, with the payment protector rider, whether the condition is permanent or not, there will be money to pay the loan for a period up to two years.

To qualify for the payment protect rider, applicants will have to be a member between age 18 and 65 with a loan. Coverage starts 30 days after enrolment and ends when membership is cancelled, when the loan is paid off, renewed or refinanced, when the member reaches age 65, when the loan goes over the stated repayment period, or when payments fall three months in arrears.

Coverage will also cease if the loan is transferred to another creditor or the borrower dies.

Medical assessments of disability will be paid for by CUNA Mutual.

Regionally, the product has already been introduced in Trinidad and Tobago, Puerto Rico and the Dominican Republic.

CUNA Mutual is an American company, based in Wisconsin, with offices in Jamaica and the Eastern Caribbean.