Debt Protection Overview - The Actuaries' Club of the Southwest

60 Pages·2004·0.87 MB·English

Debt Protection Overview
“It is not the strongest of the species
that survives, nor the most
intelligent. It is the one that is most
adaptable to change.”
Charles Darwin
©TFG and CREDITRE
Start with a Clean Slate
What are borrowers’
(cid:132)
perceived needs?
What do loan officers
(cid:132)
want?
What does management
(cid:132)
want?
©AUL®/CNL/CREDITRE
Borrowers’ Perceived Needs
If a loan officer were to ask the typical
borrower,
“What is your primary
economic concern when you
take out a new loan?”
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Borrowers’ Perceived Needs
Most would say…
(cid:137) How am I going
to pay off this
loan if I lose my
job?
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Evidence
Involuntary unemployment and unpaid
family leave insurance
Grown to $1.2 billion product in 15
(cid:132)
years
20% of all credit-related insurance
(cid:132)
Borrowers
want this protection
5 ©TFG and CREDITRE
And Our Old Friend
Credit Insurance
Credit Life Insurance Premiums
vs.
Consumer Installment Debt
$20 $1,400
$1,200
$16
Written billions $12 $1,000 allment ons
Life Net ums, in $8 Consumer Debt $$680000 mer Inst bt, in billi
dit mi su De
Cre Pre ICredit Life $400 Con
$4
$200
$0 $0
1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997
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Borrowers’ Perceived Needs
If the loan officer were to ask the
typical borrower,
“You are going to die within
four years. How will you die?”
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Borrowers’ Perceived Needs
Most people feel they will die…
Accidental death protection meets perceived
needs of borrowers
8 ©TFG and CREDITRE
What Do Loan Officers Want?
They want incentives
At $25 per sale—loan officers
(cid:132)
will move product
9 ©TFG and CREDITRE
What Do Loan Officers Want?
A product with:
No health questions
(cid:132)
No age limits
(cid:132)
Protection against risks that
(cid:132)
really concern borrowers?
10 ©TFG and CREDITRE