BOSTON—One person believes that credit insurance and debt protection continue to be a strong opportunity for CUs to drive revenue.
Julie Nielsen, regional VP at Securian Financial Group, told attendees at NAFCU’s Annual Convention here that in addition to providing revenue to the credit union and value to the member, “the intangible benefit is that this helps keep loans from going into default when members fall on hard times.”
Nielsen offered a number of examples of how these products can benefit CUs. On a $15,000 consumer loan with a five-year term and 4% interest rate, the member’s cost per day for protection is only 77 cents, whereas the credit union will see nearly $500 in extra income over the life of that loan. On a $25,000 home equity loan at 10 years and 4%, the member pays only $1.10 per day, yet the CU makes more than $1,400 over the life of the loan.
Nielsen pointed out that a credit union’s income on these products depends on both the size of the CU as well as the mark-up. Without giving names, she noted that an $80-million CU client earns about $110,000 annually by writing debt protection at a 41% fee; a $240-million CU writing both credit life and credit disability with a 37% fee earns $370,000 annually; and an $800-million CU writing CL/CD at a 50% fee earns an additional $830,000 in annual income.
More info: www.securian.com
