After 75 years of offering it to credit union members nationwide, CUNA Mutual Group is bringing an end to one of its landmark products: Life Savings Insurance.
First introduced in 1938, the life insurance coverage program is being phased out by the Madison, Wis.,-based insurer as its customer base rapidly shrinks.
Designed to promote thrift and offer death benefits to credit union members, the term life policies had been offered as a benefit of credit union membership. Credit unions paid for the product, which renewed each month, originally to help members suffering through the Great Depression.
In recent years, however, fewer credit unions elected to offer insurance as a member benefit. An attrition rate of 11% per year – 900 credit unions since 2010 –led CUNA Mutual to discontinue the insurance to focus on products more beneficial to a larger number of credit unions, according Phil Tschudy, media relations manager for CUNA Mutual.
“This is not a decision we made lightly,” said Tschudy. “We gathered feedback in advance of this decision and are fully aware of what this product means to some members. To best serve our policyholders, though, it is imperative we focus our attention and resources on products that credit unions have told us are core to their business.”
Members holding life insurance policies will have the opportunity to convert their coverage to Primary Protection, a member-paid guaranteed-issue policy, if done with 31 days of the original life insurance policy cancellation. There is no age limit to the new policy, although there are rate adjustments based upon the member's age.
The cancellation’s effects on one policy holder, a 92-year-old Minneapolis credit union member who intended to use its benefits for her funeral, was the subject of an ABC News report.