Loans and Insurance Disclosures

Question: We are selling credit life policies in connection with consumer loans. Do we have to give the insurance disclosures as well as all the loan disclosures?

Answer: The short answer is yes. You have two transactions, not one. You are making a loan, which triggers the loan disclosures such as Truth in Lending. Then, as a second transaction you are selling insurance. For this transaction, the insurance sale, you must give the consumer appropriate information about the nature of the insurance and the fact that it isn't an FDIC insured product.

Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 1, 2/04