Posts Tagged 'insurance'

Why credit life/disability is good for everyone

With the Great Recession, there has been a wave of financial industry regulations affecting everyone from small banks to giant investment firms – and credit unions like American 1. The Credit CARD Act, the opt-in regulations on overdraft protection, and now a scary-looking form that wants to scare you from opting out of credit life insurance on your loans.

Credit life works like this: if you die, your loan gets paid off. That’s it. Your family doesn’t have to come up with the payments. Nothing gets taken to court. It saves a giant hassle on your family’s end – and on our, the lender’s, end since we’re still getting paid. Win-win, right?

Credit disability works in a similar way, except if you get sick or injured, your loan payments are made while you’re off work. Accidents happen all the time, and so does sickness. None of it is expected. Disability coverage helps protect you from the unexpected.

We’ve gathered up our members’ best stories on insurance products and sharing them with the review board before this thing becomes law. We’re also urging them to reconsider this law because of its unintended consequences. You can read it for yourself.

The fact is, credit disability has helped a ton of American 1 members. They have peace of mind knowing that, if the worst happens, they don’t have to worry about their loan.

Here’s the thing: no member or member’s family who benefitted from credit life or disability protection ever regretted their decision. It’s not like a family member dies, the loan gets paid off, and the survivors think, “Gosh, why did Uncle Joe get that silly insurance?”

Or a member gets sick and says, “Man, why did I opt to have my loan paid for during this difficult time?” That doesn’t happen. Not ever.

No, these products equal peace of mind. It’s best to have fewer things to worry about when a loved one dies, gets injured, or becomes ill. And no one likes to think about it, but we’re all responsible adults here. Family members die. Family members get sick and have to take time off work. What counts is that we’re ready when the unfortunate time comes.

There’s no sense in scaring your away from valuable protection like credit life and disability. And for us, it helps all our members because we’re not trying to collect on past-due debts. Products like credit life and disability help to keep costs and rates down.

American 1’s GAP more affordable

Jessee Frey-Cochrane

People say good things come in threes, but Jessee Frey-Cochrane found out that bad luck can come in twos.

In the span of one year, Jessee had to use American 1’s Guaranteed Asset Protection (GAP) twice on different vehicles.

In August 2006, Jessee’s “summer vehicle,” a 1995 Pontiac Bonneville in great condition, suffered from a sunroof seal leak and was wrecked by mold damage. Her insurance company ruled the damage as a total loss. The next year, in April 2007, her 2004 Ford Freestar caught fire after an electronic harness defect, leading to another ruined vehicle.

Thanks to her GAP coverage, the difference between what Jessee owed on her vehicles and what the insurance company offered her in settlement disappeared.

“It really paid for itself,” Jessee, an American 1 member since 1998, says, “especially after I used the $1,000 GAP Advantage towards my next vehicle.”

Jessee, a Grass Lake resident, knew about GAP coverage as a licensed insurance agent, and shopped around for the best deal. She didn’t find it at a typical dealership, where the GAP price is based on the vehicle’s cost – and can be double or triple the price.

“American 1’s GAP was a flat rate,” she says. “So now I tell people to go to a local credit union – it’s cheaper than the dealership.”

It could just be bad luck that two of her vehicles were totaled within a year. American 1’s GAP coverage, however, helped Jessee balance the score.

“I won’t purchase a vehicle without GAP ever,” she says.

MBP an affordable repair option

Jamie James

Sometimes, good decisions don’t reveal themselves until a bit of time passes.

Take Jamie James from Brooklyn. When she financed her 1998 Mercury Sable in the spring of 2005, she had never heard of American 1’s Mechanical Breakdown Protection (MBP), and had never been able to afford a manufacturer’s warranty.

But the small bump in her loan payment was very affordable.

“I thought it was a good deal,” Jamie says. “It was cheaper than the dealer’s service plan.”

Then, a month later, her transmission went out.

She noticed the trouble a month after she financed her vehicle. When the Sable’s transmission became difficult to shift, Jamie asked her husband – who knows a thing or two about cars – what the problem was.

There was definitely a problem with the transmission, and Jamie needed to take it in for repair.

“The repair guy said he had good news, that my transmission was covered by MBP,” Jamie says. “Then he said, ‘I have better news: you don’t have to pay a deductible.’”

Several more problems – and several thousand dollars – later, Jamie is glad she sprung for the extra protection MBP offered. All the repair work on her vehicle was covered by MBP, with no out-of-pocket expenses for Jamie.

“It was the first warranty I’d ever purchased,” Jamie says. “And it’s because of the price.”

If she hadn’t decided to have her Mercury covered, “I would’ve been paying a lot of money on that car,” she says.

Instead, she paid nothing.

“I’d buy it again,” Jamie says. “The amount of money I saved on repairs made the whole thing worth it.”

MBP makes repairs simple

Julie Bumpus

No worries. That’s all Julie Bumpus wanted when she went to visit her daughter in Detroit one day.

Instead, her 2004 Chrysler Sebring stalled out on the way. Luckily, Julie was able to pull into a gas station, restart her car, and drive back home to Jonesville. She took it to a mechanic, who told her the O2 sensor was out.

Julie gasped when she heard the repair cost. Then she remembered: her vehicle was covered by American 1’s Mechanical Breakdown Protection (MBP), a vehicle protection product that covers the cost of most mechanical issues.

The mechanic looked over her policy and got right to work. It was as simple as that.

“They said, ‘Yeah, we’ll take care of it,’” Julie says. “It was simple. I didn’t have to fill out a yard of paperwork, and I didn’t owe them a dime.”

No worries, indeed. She handed over the keys to her Sebring and had it back later that afternoon. With MBP, Julie never filled out any paperwork, paid no deductible, and has had no problems since then.

“It was a lifesaver,” she says.

Thanks to MBP, Julie didn’t have to worry about the cost of her sensor repairs and paying the rest of her bills. It was one less thing to worry about. In fact, getting MBP added to her loan made perfect sense – the cost was simply added to her already-low car payment.

Julie would recommend other American 1 members get MBP protection on their vehicles, too.

“Especially if someone has a tight budget, or a car that’s a few years old, you won’t have to worry about it,” she says. “You should always have some kind of backup for repairs.”

MSN: GAP coverage is a good idea

MSN Money’s Liz Pulliam Weston, in “Why a wrecked car could cost you,” lays out why it’s good to have Guaranteed Asset Protection (GAP) coverage on your auto loan.

Because of dropping vehicle values, what you owe on your car could be more than what an insurance company will pay you for a wrecked or stolen vehicle:

Even if you made a big down payment, you still could be upside down on your loan or lease because resale values have plummeted so quickly.

Volatility in resale prices started last year, when gas prices spiked, hurting sales and values of bigger, gas-guzzling cars, said James Clark, the general manager for ALG, which publishes the Automotive Lease Guide.

Weston also notes that getting GAP from the dealership is “probably the most expensive choice.”

We have numerous stories about how GAP has helped members regain their vehicle investment. In the end, it’s affordable protection that can help cover the cost of your auto loan if the unthinkable happens.

GAP helps pay off stolen truck

traviscrallgap

Travis Crall of Litchfield took his girlfriend to Detroit to see a historical moment. The Detroit Lions, looking at the first 0-16 record in NFL history, were facing the New Orleans Saints at Ford Field one of the final games of the season.

“We watched them lose, as we figured,” Travis says.

But the Lions weren’t the only ones faced with bad luck that cold December night. After the game, Travis and his girlfriend walked the three blocks back to where they parked, in 10-below weather, only to find Travis’s 2003 Dodge Ram truck had been stolen.

After he filed a claim, Travi’s insurance company only agreed to cover $11,000 of his loan balance, leaving an $8,000 balance.

Luckily, Travis opted for Guaranteed Asset Protection (GAP) when he financed the truck with American 1. GAP covered the entire remaining amount.

Travis’s up-front cost for GAP? $235.

“For the one-time fee, it’s worth it,” he says. “It’s better than paying a lot if something happens.”

Unfortunately for Travis, that “something” was a stolen vehicle. His Dodge Ram was eventually recovered, missing several of its parts. In the meantime, Travis used the $1,000 GAP Advantage toward a Jeep. And, just in case, he opted for GAP again on his loan.

“Hopefully I don’t need it again, at least in that kind of situation,” Travis says.

GAP is much more affordable than paying the remaining loan balance should that “something” strike again.

“It pays for a little security,” Travis says.

WaMu sinks, customers still swim: so would you

Over at the Ask Metafilter, someone wondered if they should pull their money out of Washington Mutual Bank (often called “WaMu”) – you know, to be on the safe side.

The overwhelming answer? No.

Just like we mentioned a few weeks ago, when you put your money into a federally-insured financial institution, your deposits are covered up to $100,000. It’s the same for WaMu (they’re covered by FDIC insurance) as it is for American 1 (we’re covered by the NCUA).

Lots of weird stuff happening with Merrill Lynch and AIG, but fear not for American 1: we’re doing really well, and we don’t plan on going anywhere.


UPDATE: yesterday Rep. Maxine Waters, D-Calif., told NAFCU’s Congressional Caucus that credit unions are “the only sector of the financial industry that is not in dire straits right now,” thanks to CUs steering clear of sub-prime mortgages. “I know you’ll be part of the solution,” she told the credit union officials.


American 1 Federal Credit Union