Consumer Protection Insurance Disclosures & Eligibility Requirements
by Mary Beth Guard, BOL Guru
Question: I have a question regarding the Consumer Protection Insurance Disclosures. What does a bank do when someone who does not meet the eligibility requirements (i.e., due to age or the loan amount) for credit life/A&H insurance applies for a loan? Does the Bank still offer them the insurance even though they know they aren't eligible? If the Bank does offer that applicant the insurance, do they still have to give the disclosures since they offer other eligible applicants the insurance.
Answer: It all boils down to timing. If insurance will be offered, solicited or sold in connection with an application for credit, you must give one of the consumer protection insurance disclosures at the time the application is made. If you can determine prior to that point - or at the moment the customer makes the application, while there's still time to give the disclosure if it's necessary - that insurance would not be available, then my view is that you would not need to give the disclosure. It would not be helpful to the customer to receive a disclosure that relates to a product the customer will not be able to procure. In fact, under those circumstances the disclosure would simply be confusing.
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