Configuring Loan Insurance Codes - Credit Disability Info

Description

Enter the whole dollar amount unit on which the insurance rate is based.

• For example, if the rate is $1.25 per $1,000, enter 1000 here.

(Appears only for the Level Rate insurance method.) Enter the amount that the credit disability insurance costs per unit.

• For example, if the rate is $1.25 per $1,000, enter 125 here.

(Will not appear for the Level Rate insurance method.) This factor, along with a rate from the Rate Table provided by your insurance company, is used by the system to determine the applicable rate.

Generally, the rates in the Rate Table are the insurance carrier's prima facie base rates. This option field provides a variable factor to be used to adjust the table to match the specific credit union contract. In this manner, when the contract changes, you do not have to re-enter the whole table.

Table deviation factor x rate from Rate Table = Contract Rate

In the following example, the table deviation factor is 105% and the rate selected from the Rate Table for a 36-month loan is $2.190:

105%x 2.190 = 2.300 (or $2.30 per $1,000)

Enter an amount that will control how large a loan can be and still be allowed to be insured. For example, if this insurance company will not cover any loan over $50,000, enter 50000 here.

If the member requested a $75,000 loan, this insurance type could not be used.

Enter the maximum portion of a loan that the insurance company will cover. This field works in conjunction with the Maximum loan balance field. They can be the same amount or different depending on the available coverage.

Examples:

• If the insurance company will cover the entire balance of any loan up to $50,000, you would enter 50000 here and in the Maximum loan balance field.

• If the insurance company will cover up to $30,000 of any loan that is no more than $50,000 total, you would enter 30000 here and 50000 in the Maximum loan balance field.

The insurance calculation will use these values to determine full, partial, or no coverage.

Enter the maximum member age at which a borrower is eligible for coverage.

When the amortization is calculated and/or printed, as well as when premiums are posted, the system will automatically adjust from joint coverage to the single coverage code (controlled by the If joint, single insurance code field described below) when the oldest borrower exceeds the maximum insurable age, or to no coverage at all when the next oldest borrower exceeds the maximum age.

When amortizing a new loan, the system will also warn if a member is already past the age where he/she is eligible for insurance.

Enter the maximum benefit amount an individual can collect on a monthly basis. (Use a whole number.)

This will be used when calculating premiums only if the calc. type on the initial configuration screen was set to B (Max Mon Benefit Level Rate non-CUNA). For all other calc. methods (level rate, monthly renewable, single premium) this field is informational only.

Enter the maximum term with which a loan can be set up and still be eligible for insurance coverage. For example, if this insurance company will not cover any portion of any loan over 120 months, enter 120 here.

This allows you to control the maximum term of the loan separate from the maximum term that can be insured. For example, a member could take out a 180-month loan but be allowed to insure only 120 months of it. In this case, you would enter 180 here and 120 in the Disability term field. If the member requested a 360-month loan, this insurance type could not be used.

• NOTE: The maximum loan term for any loan, regardless of this setting, is 30 years (360).

Enter the maximum portion of the loan term that the insurance company will cover. This field works in conjunction with the Maximum loan term field. They can be the same (the most common method) or different depending on the available coverage.

Examples:

• If the insurance company will cover the entire term of any loan up to 120 months, you would enter 120 here and in the Maximum loan term field.

• If the insurance company will cover up to 120 months of any loan that is no more than 180 months total, you would enter 120 here and 180 in the Maximum loan term field. In this case, if the member requested a 180-month loan term, you could insure it for 120 months.

This field is used only for custom loan forms that require a statement such as the following:

“If you are totally disabled for more than xxdays, then the disability benefit will begin with the yyday of disability.”

The number of days entered in this field will appear in place of the xx, and the yy will be calculated from this number of days. For example, if 14 is entered here, the statement could be programmed to read:

“If you are totally disabled for more than 14 days, then the disability benefit will begin with the 15th day of disability.”

This field is used only for custom loan forms that require a statement about whether disability coverage is retroactive or not. If checked, coverage is retroactive to the 1st day of disability. If left unchecked, coverage is non-retroactive, meaning coverage begins on the nth day (where n is the number of days defined in the Disability days field).

• Remember that older custom forms will need to be adjusted to use this flag, if they were previously hard-coded with this information.

Enter the G/L account number to which insurance premiums should be posted (typically a Liability account).

Used for joint credit disability coverage only. This field allows you to “link” another insurance code to this one, to be used in the event that one of the borrowers can no longer be insured because he/she has reached the maximum insurable age. This allows the insurance premiums to roll over to single coverage at that time. Enter the corresponding insurance code that is set up for single credit disability insurance.

• If this insurance code offers single credit disability coverage only, leave this field blank.

CAUTION: If a Joint Coverage Code is mistakenly entered into this field, it will likely prevent your Loan Officers from editing an application in the Work Loan Application and Process Member Applications tools.