Frequently Asked Questions about Loan Protection Insurance
When credit union members take on a new financial obligation like a loan, they often ask about what would happen in the event of a death or disability.
That's where loan protection insurance comes in. Credit life and disability insurance can be a big help financially when difficult circumstances arise. Here are a few basic questions about this important financial protection available to credit union members.

What is loan protection?
Loan protection insurance is credit insurance directly tied to your loan. Credit life insurance pays off the loan (or reduces it) if the borrower dies. Credit disability insurance takes over the loan payments if the borrower becomes disabled.

How is loan protection different from other kinds of insurance?
Loan protection insurance takes care of a specific need. It's designed to make sure a debt doesn't become a burden if the borrower dies or becomes disabled.

How do you get coverage on your loan?
At some time during the process of taking a loan, you'll be given a chance to enroll in the loan protection program sponsored by your credit union. You'll also be informed of the cost. If you want loan protection, typically you won't have to go through a long approval process. Your insurance will become effective as soon as your loan is finalized and the first premium is paid.

Why do people buy loan protection insurance?
It offers a convenient, affordable way to make sure their family or loved ones wouldn't be saddled with the burden of debt in the event of death or disability. The cost is usually quite affordable.

How is the cost determined?
The cost of credit insurance is determined by your loan balance, not by your age, as it is with most other types of insurance. Your premiums only reflect the cost to insure your loan. For convenience, your premiums are included in your loan payment.

Who provides loan protection insurance?
Loan protection insurance is underwritten by Minnesota Life Insurance Company, or, in some cases, other carriers. Ask your credit union for complete description of carriers and plans. As of October 1999, Minnesota Life was rated A++ by A.M. Best for financial condition (the highest of Best's 15 ratings).

If you want to know more about loan protection insurance, call the credit union and we will be happy to answer your questions.