Monthly Renewable Credit Disability Insurance

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Monthly renewable credit disability insurance (MRCDI) provides protection to a credit union's borrowing members for individual active loans in case the loan holder becomes temporarily or permanently disabled. The loan holder is responsible for all premium payments for this protection.

Portico calculates and posts credit disability insurance premiums for CUNA Mutual, Minnesota Mutual, PHF Life Insurance Company (formerly Richard J. Katz), and Creditors Resources. Portico also supports truncated coverage for level-rate insurance for credit unions using CUNA Mutual.

Non-coverage Guidelines

A loan or a portion of a loan can be non-covered based on the maximum coverage limits established by the contract plan. The coverage limits are:

  • Eligible loans, which have not been paid within the maximum duration time limit, are charged an insurance premium up to the insurable maximum. The message EXCEEDED MAX TERM/RATE POINTER DEFAULTED TO MAXIMUM TERM prints on the Monthly Renewable Credit Disability Insurance Report 130 indicating only a portion of the loan balance is insured due to maximum duration limits.
  • If the eligible loan(s) of a participating member exceeds the maximum insurable amount, premiums are calculated on the loan amount up to this maximum and the message LOAN BALANCE EXCEEDS MAXIMUM/REDUCED prints on the 130 Report. When the loan balance becomes zero, premium calculation automatically stops and the message NO PREMIUM DUE TO ZERO OR NEGATIVE LOAN BALANCE prints on the 130 Report. The maximum insurable amount appears on the 130 Report Rules
  • If the total monthly payments for all eligible loans of a member exceed the maximum insurable monthly payment, premiums are calculated on the loan amount up to the insurable payment amount and the message PAYMENT EXCEEDS MAXIMUM/REDUCED appears on the 130 Report. The maximum insurable monthly payment appears on the 130 Report Rules.
  • If a participating member is more than a specified number of days delinquent on the loan at month end, the system will stop collecting the monthly premium. The exception message EXCESSIVE DELINQUENCY/COVERAGE STOPPED appears on the 130 Report indicating this action. The credit union can define between 1 and 999 days for the maximum delinquent setting on the 130 Report Rules. If a loan becomes current or drops below the maximum delinquency value at month end, the system will resume posting insurance premiums. It is the credit union's responsibility to remove the insurance designation at the loan level if their insurance policy requires that a delinquent loan re-qualify for coverage.
  • The maximum insurable age for all MRCDI is defined on the 130 Report Rules. If the member is over the maximum age and single or joint to none coverage is selected, coverage is automatically stopped and the message MBR OVER MAX AGE/COVERAGE STOPPED (SINGLE OR JOINT TO NONE COVERAGE) appears on the 130 Report. If joint to single to none coverage is selected and one covered member is over the maximum age, the message JOINT MBR OVER MAX AGE, PREM CALC AT SINGLE RATE (JT TO SINGLE TO NONE) appears on the 130 Report. If both covered members are over the maximum age, the message JOINT MBRS OVER MAX AGE, COVERAGE STOPPED (JT TO SINGLE TO NONE) appears on the 130 Report. If for any reason it is not possible to calculate the member’s age, coverage is allowed and the message INVALID DATE OF BIRTH/COVERAGE ISSUED appears on the report. The member's birth date should be corrected using the Contact Information tab.

Premium Payments

Members may make premium payments by either share withdrawal or loan add-on and may change the payment method at any time.

  • Share Withdrawal
    The amount of the premium is withdrawn from the member's lowest numbered share account. The member’s share account is debited and the accounts payable GL (801900) is credited. If the member's available share balance is less than the amount required for premium payment, the calculated premium appears on the 130 Report with a message indicating the premium was uncollectible from the share account. Portico will not attempt to obtain the funds from any other share accounts.
  • Loan Add-on
    The amount of the premium is added to the member's loan for which the premium is calculated. The member’s loan is debited and the accounts payable GL (801900) is credited. Interest due on the loan which must be determined for premium calculation, is added to the Finance Charges Calculated But Not Collected (FCCBNC) field on the Loans - Interest/Charges tab. The interest paid-to-date is advanced to the current business date. If a loan is delinquent, the loan add-on will still be allowed. The credit union is responsible for stopping a member's coverage if a loan is delinquent.

Reporting

The credit union receives a 130 Report once a month as premiums are calculated and posted. Any premiums that cannot be posted to member accounts (for example, the share account has insufficient funds or loan exceeds credit limit) are listed with an explanation. Any exceptions discovered during processing are also noted. If a member either starts or stops coverage using the New Loan - Setup tab, the message MEMBER HAS STARTED COVERAGE THIS MONTH or MEMBER REQUESTED COVERAGE STOPPED appears on the report. MRCDI premium payment transactions appear on member statements under the proper share or loan account depending on method of payment. The transaction description is DISABILITY PREM. The premium payment, by share withdrawal or add-on, is reported on the Financial Transaction Register Report 420. The transaction code is ID.

Setting Up Credit Disability Insurance

Contacting the Insurance Company
To set up credit disability insurance for your credit union, contact a representative from the insurance company. All contract negotiations are worked out at this time. The representative will send Portico the credit union's contract information, including:

  • Contract number
  • Insurance plan
  • Premium rates
    • Rate table for variable rate contracts
    • Single rate and loan maximum duration for level rate contracts

Portico Customer Service will use this information to set up the Credit Union Profile - Loans tab, the Loan Profiles - Additional Information tab, and 130 Report Rules.

Monthly Renewable Credit Disability Insurance Report 130

The following items must be specified on the report rules of the Monthly Renewable Credit Disability Insurance Report 130.

  • Policy number
  • Rate table
  • Insurance plan
  • Maximum insurable loan amount
  • Maximum payment
  • Maximum age
  • Maximum delinquent days
  • Maximum months insured for truncated level-rate credit disability insurance
  • Maximum duration term for truncated level-rate credit disability insurance

CUNA Insurance: If CUNA is your credit union’s insurance company, CUNA recommends setting the maximum payment coverage to $99999.99 for level rate (i.e., single rate) credit disability insurance. The actual monthly benefit maximum should be entered for monthly renewable (i.e., table of 120 rates) credit disability insurance. In addition, any joint insurance, whether level rate or monthly renewable credit disability, should be set up with the Joint to Single to None option.

Credit Union Profile – Loans tab

The MRCDI field in the Insurance section on the Credit Union Profile – Loans tab indicates whether Portico calculates and posts CDI for the credit union. Portico calculates premiums based on a level rate or a rate table, depending on the loan plan. The valid options are:

  • Y - Calculate and post CDI premiums based on the fields on the 130 Report Rules. If you select Y, you only specify criteria for a level rate calculation or a rate table calculation. You cannot specify criteria for both.
  • N - Do not calculate CDI premiums. System default.

GL Account

Portico uses general ledger account 801-900 for Credit Disability Insurance. The system will automatically build the GL when credit disability insurance (CDI) is setup.

The Support Truncated Coverage for Level Rate Insurance check box on the Credit Union Profile – Loans tab indicates that Portico will determine closed-end loan eligibility for level rate credit disability insurance using credit union-defined maximums. These maximums will be used to support truncated coverage on new loans. This check box should only be selected if your main credit union branch resides in a state where CUNA truncated coverage support has been introduced and maximums have been established for loans with newly-elected level rate insurance. Loans existing on Portico, prior to activation of truncated coverage, will continue to process without the new eligibility requirements.

  • When the Support Truncated Coverage for Level Rate Insurance check box is not selected, level rate credit disability insurance processing remains unchanged, and truncated coverage support using a maximum duration term is not supported for level rate credit disability insurance. Unselected is the default option for this check box and should remain the option until truncated coverage has been introduced in your state. Insurance coverage elected dates other than the loan booking date are not allowed; therefore, insurance coverage is considered supported from the origination date of the loan.
  • If the Support Truncated Coverage for Level Rate Insurance check box is selected, truncated coverage support using a maximum duration term for level rate credit disability insurance is supported. This allows a loan to be considered eligible for insurance where the insurance does not cover the entire term of the loan. In addition, insurance coverage elected dates, other than the loan booking date, are allowed. 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 coverage elected date.

For credit unions that have Portico calculate and post level rate insurance premiums using the 130 and 485 Reports, but CUNA is not their insurance partner, you verify that truncated coverage for level rate insurance is supported by your insurance vendor. The Support Truncated Coverage for Level Rate Insurance check box should not be selected for any of these vendors, Minnesota Mutual, PHF Life Insurance Company (formerly Richard J. Katz), and Creditors Resources, until verification has been completed.

Loan Profiles – Additional Information tab

The Credit Disability check box on the Loan Profiles – Additional Information tab indicates if the loan type with credit disability insurance are eligible for Credit Insurance Participation tracking with CUNA Mutual. On a monthly basis, the credit union will extract tracking information using Reporting Analytics and copy it to a disk to send it to CUNA Mutual. It will be necessary to use Reporting Analytics history with this option.