Two national consumer advocacy groups have called on state insurance regulators and legislators to lower the rates for credit life insurance, which they say is a highly overpriced and frequently unnecessary product.

According to data from the Consumer Federation of America and the U.S. Public Interest Research Group, credit life insurance products pay out 42% of the premiums collected. The industry standard calls for at least 60% of premiums to be paid in claims. Credit life, a product commonly sold by banks and credit unions, pays off a loan if the borrower dies.

Credit life payouts increased after the groups' first two studies in 1990 and 1992, said Stephen Brobeck, executive director of the Consumer Federation. But, he said, payouts are on the decline again.

In 1987, before the studies, credit life products paid 39% in claims. After the second report was released in 1992, payouts rose to 45%. But that dropped to 43% in 1994 and to 42% in 1995.

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