# Anger as credit unions move to lower insurance death benefits



## pudds (12 Feb 2019)

Sad to see this, Credit union members have reacted angrily to moves by a number of the lenders to reduce a key insurance benefit, reduced from €3,250 to €1,950. In todays indo, 

https://www.independent.ie/business...-lower-insurance-death-benefits-37802478.html


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## 24601 (12 Feb 2019)

A credit union has no business paying such crazy insurance premiums if it can't keep the core business profitable. Many credit unions should be getting rid of it altogether to lean up their operations.


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## Palerider (13 Feb 2019)

24601 said:


> A credit union has no business paying such crazy insurance premiums if it can't keep the core business profitable. Many credit unions should be getting rid of it altogether to lean up their operations.



Your post is missing one of the cornerstone advantages of having a local CU account, especially for Older clients.

People already pay insurance companies monthly for a policy that pays out on death, many CU’s once criteria is met enhance the deceased persons account, in so many cases this account is on the books for many years. Opening an account today and passing away in two years is not usually covered, one must have a long history and minimum balances.

I have experience recently with a deceased in law who had a CU account for 40+ years, it paid out €1300, all criteria was met, the deceased made sure of that.

This will be hard to swallow for long standing clients of CU’s.

They are not commercial enterprises and have a valuable role to play in local areas.


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## NoRegretsCoyote (13 Feb 2019)

This is just what happens when you have very low long-term interest rates.

The price of the future goes up.


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## Monbretia (13 Feb 2019)

This topic came up at our recent CU AGM, there were unhappy older members but it's primarily a cost issue.  The premium is going up and the CU income is going down mainly due to the low interest rates that they are getting on their surplus funds.   The balance in accounts was reduced as well from 100k down to I think 50k but could be wrong on that as it didn't affect me anyway!   

While they are not commercial enterprises as such they still must balance the budget and the low interest rate thing plus decline in lending is hitting them big time.


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## 24601 (13 Feb 2019)

Palerider said:


> Your post is missing one of the cornerstone advantages of having a local CU account, especially for Older clients.
> 
> People already pay insurance companies monthly for a policy that pays out on death, many CU’s once criteria is met enhance the deceased persons account, in so many cases this account is on the books for many years. Opening an account today and passing away in two years is not usually covered, one must have a long history and minimum balances.
> 
> ...



I don't agree. Paying out unnecessary premiums when surpluses are falling is lunacy - in some cases these businesses aren't viable with their current return on assets. The credit unions are there to serve as lenders to their communities not as investment clubs or insurance payouts for the relatives of deceased members. And they don't need any more deposits and are generally actively discouraging same, which is completely at odds with the provision of generous death insurance products linked to saving balances. That €1,300 was no doubt appreciated but in the grand scheme of things it probably didn't cover a whole pile and resulted in a huge cost to the credit union. 

This idea that they are not commercial enterprises is a misnomer - they're not-for-profits but they need to generate surpluses to continue existing. I'd rather they leaned up to provide genuine alternatives to banks for younger people now and into the future than dwindling away their reserves to make big insurance payouts to the next of kind of older members. Boards and management should be trying to shore up future viability, not retain archaic, expensive insurance benefits.


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## Feemar5 (13 Feb 2019)

Credit unions are now run like banks - does this reduction apply in all credit unions?    if so I feel members should be notified as many older people have factored this grant into their financial affairs. Our local credit union used the insurance cover as part of their advertising.    I know they have problems with their surpluses but they need to be honest with members.


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## odyssey06 (13 Feb 2019)

Feemar5 said:


> Credit unions are now run like banks - does this reduction apply in all credit unions?    if so I feel members should be notified as many older people have factored this grant into their financial affairs. Our local credit union used the insurance cover as part of their advertising.    I know they have problems with their surpluses but they need to be honest with members.



It is happening on a case by case basis, from what I can tell from the linked article:
_The Irish League of Credit Unions said eight of its member credit unions reduced the level of death benefit insurance last year, and seven lowered the cover in 2017._


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## odyssey06 (13 Feb 2019)

Monbretia said:


> This topic came up at our recent CU AGM, there were unhappy older members but it's primarily a cost issue.  The premium is going up and the CU income is going down mainly due to the low interest rates that they are getting on their surplus funds.   The balance in accounts was reduced as well from 100k down to I think 50k but could be wrong on that as it didn't affect me anyway!



Confused by 'premium', do you mean the CU is paying a premium to a third party to fund this cover?


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## Zebedee (13 Feb 2019)

CUs pay a premium to the Leagues own insurer, ECCU. It’s an annual payment depending on the level of cover chosen. Unfortunately the premium is rising because the average age of credit unions membership is rising (despite efforts to recruit younger members).


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## odyssey06 (13 Feb 2019)

Zebedee said:


> CUs pay a premium to the Leagues own insurer, ECCU. It’s an annual payment depending on the level of cover chosen. Unfortunately the premium is rising because the average age of credit unions membership is rising (despite efforts to recruit younger members).



Strange given the payouts involved and the certainty of a certain number of payouts a year, I would have thought it would make as much sense for then CU to fund this directly. But if it's all handled in house maybe it makes no odds. Would be stranger if they were involving a third party insurer.


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## Monbretia (13 Feb 2019)

Yes, it's an insurance policy and has a premium.


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## Zebedee (13 Feb 2019)

My knowledge is a bit out of date but they used to rebate some of the profits back to the cus. Not sure if that happens nowadays.


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## 24601 (13 Feb 2019)

Feemar5 said:


> Credit unions are now run like banks - does this reduction apply in all credit unions?    if so I feel members should be notified as many older people have factored this grant into their financial affairs. Our local credit union used the insurance cover as part of their advertising.    I know they have problems with their surpluses but they need to be honest with members.



Members are notified in advance of any changes. Some credit unions have reduced DBI cover, some have gotten rid altogether, some have replaced it with a member-pay product and some others have, believe it or not, even increased their cover levels. All credit unions are independent of each other so the level of cover varies wildly. Life Savings Protection is separate and all ILCU-affiliated credit unions must have some level of cover. 

I don't really see what this has to do with credit unions being run like banks? If a credit union board of directors projects that it's going to start running deficits in the next few years what would you suggest they do? Loan demand and interest rates are extremely low so other than shutting up shop there little much they can do - it would seem absolutely obvious and reasonable that they would reduce discretionary insurance premiums.


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