Credit Life Insurance Disclosures

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Question:

We do not actively solict the purchase of credit life insurance. However, occasionally a customer will request it. When this happens, we do sell it to them. Do we have to give the Consumer Protection Insurance Disclosure at time of application to all consumer loan applicants on the off chance that we might end up selling them credit life insurance? If not, do we have to give it when a customer asks for credit life insurance? And last but not least am I correct in assuming that if we do not sale insurance to the consumer the initial purchase disclosure is not required?

Answer:

Answer by Jack Holzknecht:
Section .40(b) of the final insurance regulations requires the credit disclosure "in the case of an application for credit in connection with which an insurance product or annuity is solicited, offered, or sold." If you "offer" the credit life or if it is ultimately "sold" and the disclosure was not provided at application, a violation results.

If credit life is not sold to the customer, then the insurance disclosure required by .40(a) is not needed.

Answer:

Answer by Lucy Griffin:
The regulation doesn't turn on whether you actively solicit the insurance sale. The regulators especially the FDIC are most concerned that there be no confusion about what is an insured deposit and what is a different i.e. insurance product. Therefore the insurance disclosures are triggered whenever there is any kind of insurance sale.

First published on BankersOnline.com 11/5/01