By: Trevor Keney, Assistant Vice President, Consumer Lending Manager, Fargo, First International Bank & Trust
Do you really need Guaranteed Asset Protection (GAP) and Credit Life and Disability Insurance? Customers ask me this all the time, and the best answer is to explain how these products can help protect customers’ finances.
Protection that pays: Credit Life and Disability Insurance
This coverage is one of our insurance products that can help protect you and your loan from unexpected death or disabling injuries that could result in financial hardship. People take out loans for vehicles, special vacations, home renovations and other enhancements for their lives. Credit Life and Disability Insurance helps protect these loans.
If your income is suddenly reduced or gone, due to an unexpected death or disabling injury, your family’s financial picture can change dramatically. Your family will already be grappling with emotional stress, and may be struggling to make loan payments and trying to avoid damaging their credit history. They could be digging into savings to meet daily living expenses and the standard of living you’ve worked so hard for might be in jeopardy.
What will happen to your family if your income is reduced or eliminated due to a disabling injury, illness or your unexpected death? Do you have a plan? It’s a smart idea to add credit life and disability insurance to your loans to help your family maintain their standard of living in the event of a personal disaster.
If you’re disabled due to injury or sickness, your monthly loan payments will be paid until you’re no longer disabled, your loan is paid, or you reach the policy’s maximum benefit. If you pass away and your claim is payable, your eligible loan balance is reduced or paid off. This helps conserve your family’s savings and allows them to use other insurance funds to meet day-to-day living expenses, preserving the standard of living you worked so hard to achieve.
Other features of Credit Life and Disability Insurance that our customers appreciate: It does not require a full physical for “proof of insurability,” you simply have to answer a few questions related to your general health history; we will finance it for you by adding it to your loan amount; the premiums are included in your monthly loan payment, making the cost affordable. We explain all of the details and costs when we discuss the loan.
We encourage people to think of Credit Life and Disability Insurance as peace of mind. Unfortunately, we all know someone who has unexpectedly passed away or had a debilitating injury. This insurance protects your standard of living by not making an already tragic time even worse. Ask us about this important insurance for your new and existing loans.
Covering the auto insurance gap
Guaranteed Asset Protection (GAP), covers your vehicle if it is accidentally damaged beyond repair, stolen or declared a total loss. Here’s how it works: GAP pays the difference between your primary insurance settlement, which is typically the actual cash value of the vehicle, and the loan balance (if it’s higher).
For example, let’s say you bought a new car for $20,000. You made a $2,000 down payment, so you financed $18,000. A couple of months later, you get into an accident. Thank goodness, no one was hurt—but your car is totaled. Now, your car is valued by your insurance company at only $15,000. In those two months, you’ve made two car payments of $450 each—and you haven’t made much of a dent in your principal. Now, you owe a lot of money on a car that doesn’t exist anymore. That’s where GAP coverage would kick in, helping you to avoid paying out of pocket for a car that’s been destroyed.
Other features of GAP that our customers appreciate: It has a 60-day “free look” period so if you decide it is not for you, you can cancel it for a full refund; we offer rates that are generally more competitive than most protection products sold by auto dealerships; we will finance it for you by adding it to your loan amount; the cost is included in your monthly loan payment (sometimes for as little as $5.00 per month), making it affordable; it can cover multiple pieces of collateral, so if you have four vehicles, GAP can cover all four.
See why my colleagues and I think GAP and Credit Life and Disability Insurance are important products to consider? Call or stop by to visit with us about peace of mind for your loans.
Trevor grew up in Bismarck, N.D., earned his Business Management degree from Minnesota State University Moorhead (MSUM) in Moorhead, MN and has worked in financial services ever since, including mortgage refinancing, debt consolidation, and now the last eight years focused on consumer lending for our Fargo customers. Trevor’s NMLS #: 766448