Credit Disability and Credit Life Loan Protection Insurance

Portico supports Portico-calculated and non-Portico calculated credit union-paid loan protection insurance which provides insurance coverage on loans at no direct cost to your credit union members, and member-pay loan protection insurance whereby the member pays either all or a portion of his total premium amount each month.

For non-Portico-calculated loan protection insurance, Portico automatically produces an extract transmission of covered loans to be sent to the insurance processor. In addition, Portico processes a transmission containing the premium transactions created by the insurance processor and reports the member’s premium payments and the credit union’s LPI liability.

In 2012, CUNA introduced a new insurance calculation engine for level rate credit life and level rate credit disability insurances. The insurance calculator includes truncated coverage and absolute term maximum. Implementation of the new calculator will occur for the followings states based on the location of your main branch.

• April 1, 2012 Iowa
• September 1, 2012 South Dakota

Implementation for Minnesota, New York and Texas are upcoming but no tentative dates have been set. Remaining states will be transitioned to the new calculator over the next 5 years. Once a state supports the new CUNA insurance calculator, new loans will use the new calculation parameters for level rate credit life and level rate credit disability insurances. Truncated coverage and absolute term maximum should not be supported on any existing loans with insurance.

If your credit union calculates and posts level rate insurance premiums using the Credit Disability Report 130 and Credit Life Report 485, Portico will support the ability to input insurance election dates and truncated coverage using a loan maximum duration term for level rate credit disability and credit life insurances.

Once your state has transitioned to the new insurance calculator, and you still support level rate credit disability and/or credit life insurance on new loans, you will need to contact your CUNA representative to obtain the loan maximum duration from your rate file. To begin using these parameters on the Credit Disability Report 130 and Credit Life Report 485, you must submit a request to Portico Client Services. If your credit union is grandfathering out level rate credit disability and/or credit life insurance, where no new or existing loans will support level rate insurance, then no changes are necessary.

Truncated coverage indicates that the closed-end loan is covered by insurance for only a certain number of months and then discontinued. Open end loans are covered by insurance for the life of the loan. Once a credit union supports truncated coverage, the loan maturity date will be compared to the maximum duration term for the insurance type to determine eligibility; therefore, all closed end loans will be required to have a maturity date. When a new loan is booked to Portico from Loancierge or another loan product, Portico will enter the effective date of the loan as the insurance election date.

For credit unions that have Portico calculate and post level rate insurance premiums using the 130 Report and 485 Report, but CUNA is not your insurance partner, you must verify that this new process is supported by your vendor if you would like to implement truncated coverage for level rate insurance for your new closed end loans.