Current through Reg. 49, No. 38; September 20, 2024
(a) Authority. A
credit union may make insurance products available to its members, including
insurance products at the individual member's expense, subject to the following
conditions:
(1) Except as provided in
paragraphs (2) and (3) of this subsection, the purchase of any type of
insurance coverage by a member must be voluntary, and a copy of the signed and
dated written election to purchase the insurance must be on file at the credit
union.
(2) Insurance may be
required on a loan if the coverage and the charges for the insurance bear a
reasonable relationship to:
(A) the value of
the collateral;
(B) the existing
hazards or risk of loss, damage, or destruction; and
(C) the amount, term, and conditions of the
loan.
(3) if the
insurance is a condition of a loan, the credit union shall give the member
written notice that clearly and conspicuously states:
(A) that insurance is required in connection
with the loan; and
(B) that the
member may purchase or provide the insurance from a carrier of the member's
choice, or the member may assign any existing insurance coverage.
(4) An officer, director,
employee, or committee member of a credit union may not accept anything of
value from an insurance agent, insurance company, or other insurance provider
offered to induce the credit union to sell or offer to sell insurance or other
related products or services to the members of the credit union.
(5) If a credit union replaces an existing
loan or renews a loan and sells the member new credit life or disability
insurance, the credit union shall cancel the prior insurance and provide the
member with a refund or credit of the unearned premium or identifiable charge
before selling the new insurance to the member.
(6) The person selling or offering for sale
any insurance product in any part of a credit union's office or on its behalf
must be at all times appropriately qualified and licensed under applicable
State insurance licensing standards with regard to the specific products being
sold or recommended.
(b)
Unsafe and Unsound Practice. It is an unsafe and unsound practice for any
director, officer, or employee of a credit union, who is involved in the sale
of insurance products to members, to take advantage of that business
opportunity for personal profit. Recommendations to members to buy insurance
should be based on the benefits of the policy, not the compensation received
from the sale.
(c) Prohibited
Practices. A director, officer, or employee of a credit union may not engage in
any practice that would lead a member to believe that a loan or extension of
credit is conditional upon either:
(1) The
purchase of an insurance product from the credit union of or any of its
affiliates; or
(2) An agreement by
the member not to obtain, or a prohibition on the member from obtaining, an
insurance product from an unaffiliated entity.
