MADISON, Wis. CUNA Mutual Group said it is terminating its life savings insurance program, once offered to tens of thousands of credit union members across the nation, as more CUs seek ways to cut expenses and provide other insurance alternatives.
The decision to end the Depression-era insurance program, once offered through more than 10,000 CUs to encourage member saving, was due to an increasing numbers of credit unions—which pay the premiums on the $2,000 policies—dropping the program, according to Phil Tschudy, media relations manager at CUNA Mutual. An average of 10% of CUs a year have been dropping out leaving only 1,250 participants, he said.
“It was not sustainable in the long-term, credit unions are no longer interested in the program” Tschudy told Credit Union Journal Tuesday. “We want to offer products that our credit unions want, that they value and are core to their business.”
The credit union insurer introduced Life Savings Insurance in 1938 as one of its first products, providing something of a life insurance benefit. Many people used the benefits—at one time as much as $5,000—for funeral and burial expenses. The premiums were paid by their credit unions. “It was a very popular product over the years, as you can imagine,” Tschudy noted.
While the credit unions are phasing out the product, CUNA Mutual had agreed to offer policyholders an option, to convert it into a whole life policy. The member, however, will have to pay the premium. “We wanted to at least give people the option to convert,” Tschudy said.
