Answer:
There are two types of disclosures:1. Credit Application disclosures [Section 343.40(b)]: must be given orally and in writing at the time of application if an insurance product is solicited, offered or sold in connection with credit request. The disclosures must state the following:
- That the bank may not condition the credit request on the consumer purchasing insurance from the bank or its affiliates.
- The bank may not prohibit the consumer from purchasing insurance from an unaffiliated entity.
2. Credit Insurance disclosures [Section 343.40(a)]: must be given orally and in writing prior to the initial sale of an insurance product or annuity. The disclosures must state the following:
- That the product in not a deposit product or guaranteed by, the bank or an affiliate of the bank.
- That the product is not insured by the FDIC or any other agency of the U.S, the bank, or an affiliate (if applicable).
- That the product involves investment risk and a possible loss of value may occur (if applicable).
The financial institution must get written acknowledgment from the consumer at the time the disclosures are provided stating that both oral and written disclosures were provided [Section 343.40(c)(7)].
For example, if a consumer is purchasing homeowner’s insurance at an office of your bank that is not in connection with a credit request the insurance disclosure is required to be provided to the consumer (whether it is a credit transaction or not). If a consumer applies for a car loan and credit insurance is offered, the credit application disclosure is required in addition to the insurance disclosure.
First published on BankersOnline.com 5/28/07
print
share