Debt Protection/Debt Cancellation/Debt Suspension products represent a refreshing lending protection solution for credit unions. Currently, more than two dozen credit union pioneers are either offering or implementing a Debt Protection Product (DPP) solution, plus many more credit unions are actively exploring this approach to lending protection. DPP products originated in the bank market. While they are a good product solution for banks, the flexibility and freedom they offer makes them perfect for credit unions. Read on and find out why.
What Are Debt Protection Products?
Debt Protection Products are credit union loan products that consist of a two-party agreement between the credit union and the credit union member. In return for payment of a fee, the member receives a contractual promise from the credit union to cancel, suspend or otherwise modify the member's debt when certain protected events occur. These triggering events may include death, disability, involuntary unemployment, total loss of a vehicle (GAP) and many other contingencies. These products are considered incidental to the business of lending and are not regulated as insurance products. This freedom opens up a number of new and exciting possibilities for credit unions due to the flexibility in design/pricing, the flexibility in the construction of contractual language, and the freedom from insurance licensing/regulations.
The Debt Protection Opportunity for Credit Unions
Why is a DPP solution perfect for credit unions? The answer is simple-the Debt Protection Product solution is a better platform to meet the varied needs of credit unions and credit union members. While credit unions continue to grow and diversify, they generally serve memberships with varied, and often unique, needs. The DPP solution is a flexible solution that gives credit unions the ability and freedom to tailor product features to fit their particular types of memberships. Whether your credit union's membership consists of airline employees, manufacturing groups, government employees, teachers, military personnel, other employer groups, or a cross section of the community, the DPP solution can help you create a product set designed with your membership in mind. This credit-union-specific design, along with your credit union's brand name on the product, can go a long way toward creating satisfied credit union members, more protected loans, and more income for your credit union.
Is Debt Protection Right for Your Credit Union?
When evaluating whether the DPP opportunity is right for your credit union, you will need to consider a number of important factors. To provide some assistance, we created an evaluation questionnaire, found at http://creditre.net/DPPEval.htm, especially for credit unions. This questionnaire takes you through areas you will need to consider when deciding whether a DPP solution is right for you. You can complete the questionnaire and have it electronically scored and analyzed through the privacy of your own computer. We have tried to anticipate your questions; however, after completing this questionnaire, you will probably still have questions. Most credit unions will benefit from professional assistance to determine if a DPP solution is the right solution for them.
Recently, credit unions from all over the country, along with vendors supporting credit unions, gathered for the first Debt Protection Seminar for Credit Unions sponsored by CREDITRE, an independent actuarial consulting firm specializing in supporting credit insurance and debt protection products. Attendees learned everything they needed to know to get started with debt protection products, while sharing their knowledge and experience with each other. If you were unable to attend this seminar, more DPP information is available from CREDITRE at www.creditre.net or from a number of other vendors supporting the credit union market.
If you are unaware of the DPP opportunity, it is time to learn. If you are already aware of the DPP opportunity but not implementing a solution, it is time to evaluate and act. If you are already offering a DPP solution, it is time for us to say Thank You for having the courage to be a pioneer. The DPP solution is the perfect choice for credit unions.
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