Documenting Declined Insurance

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Question:

Is it a requirement to any regulation that the customer sign on their loan documents that they decline credit life insurance? We give the required notice at application that any insurance sold isn't covered by FDIC, but I'm just wondering about if a customer doesn't want the insurance.

Answer:

Reg. Z, 226.4(d)(3)(C) requires a signature or initial for acceptance of insurance, and its exclusion from the finance charge.

It is not required to sign for a declination of coverage. Some internal policies can require an acknowledgment so the borrower(s) realize they are not covered and do not dispute later that they were under the impression that they were covered.

First published on BankersOnline.com 2/23/04