FCUs Can Replace Credit Life With Debt Cancellation Policy

Published January 14, 2008, 8:34 p.m. EST

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Updated August 27, 2020, 1:27 a.m. EDT

1 Min Read

ALEXANDRIA, Va. – NCUA said federal credit unions may replace credit life insurance policies it offers members with a debt cancellation program.

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Though the programs offer similar benefits, credit life is regulated as an insurance product under state law and is offered by credit unions through third-party providers. Debt cancellation programs are arrangements between creditors and borrowers without a third-party insurer and are permissible loan-related products for federal credit unions under NCUA’s Incidental Powers rules.

NCUA disclosed its position in a new legal opinion letter provided to Southwest Business Corp. in San Antonio.

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