Loan Insurance Code Configuration Age Rated Table
This is the final screen that appears when setting up a loan insurance code that uses age-rated tables. With the age-rated calculation method, the rate used to calculate the insurance premium is determined by a table that is set up according to member age ranges. The premium is then calculated based on the principal balance of the loan.
CAUTION: Contact CU*Answers for assistance before configuring age-rated life insurance! In addition, if your credit union currently has separate insurance codes configured for each age range, preparation and testing will be required to implement the transition to a single code.
Start by choosing the appropriate Age type setting for your state. (State law determines whether Anniversary Age or Age at Issue should be used to determine the member's rate. See below for a description of each.)
Next, use the table to enter up to 10 age ranges with the associated single and joint rate. When done, use Enter to save and return to the first insurance type configuration screen.
With this method, the rate is determined at an “anniversary” date” which is a certain number of years from the date the member receives the loan. This period is controlled by the setting in the If ;'A' - number of years for initial rate period field.
Thereafter, the rate is changed periodically based on the member's age at the end of a certain incremental term. The number of years for this term is controlled by the setting in the If 'A' - number of years for rate period increments field.
For example, say the initial term is set to 5 years and the incremental term is set to 7 years. A member who is 20 years old when the loan is created will use the rate for that age for the first 5 years. After 7 years, the rate table is consulted again for the proper rate for someone who is 27 years old. That rate will be in place for another 7 years. At that time (assuming the loan is still open), the rate table is consulted again for the proper rate for a 34-year-old, and so on.
With this method, the same rate is in place for the entire loan according to how old the member was at the time the loan was created. The rate table is consulted only once, when the loan is set up.