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#1658833 - 02/01/12 12:57 PM insurance disclosure
cricket Offline
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Sorry for probably an old question but have received conflicting requirements from examiners yesterday. Our bank offers credit life but we do not have a disclosure signed if an individual is not offered credit life. We have a specific case of an individual that is not eligible for credit life and we were told the disclosure needed to be signed because the bank offers credit life. It was never mentioned or offered to this customer.

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Lending Compliance
#1658930 - 02/01/12 02:20 PM Re: insurance disclosure cricket
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
There is no requirement in Reg Z for the borrower to acknowledge they did not want credit insurance or they were not offered credit insurance. Reg Z only requires that they acknowledge they wanted the insurance. From 226.4

(iii) The consumer signs or initials an affirmative written request for the insurance after receiving the disclosures specified in this paragraph, except as provided in paragraph (d)(4) of this section. Any consumer in the transaction may sign or initial the request.
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#1658967 - 02/01/12 02:57 PM Re: insurance disclosure Dan Persfull
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A similar question has come up on this topic. Our consumer notes have the disclosure and we always have them initial whether or not they want the insurance. This disclosure is not on the universal note. When we use this note for a business purpose loan to an individual we've been using an addendum to get them to mark if they want the insurance or not. However, some loan officers do not get the addendum signed. Since the bank offers credit life we were thinking it needed signed. So since it is our normal practice to get something signed/initialed could it be an issue with examiners if there were some missing?

Cricket: Are your examiners satisified with the language in Reg. Z that only an affirmative answer is required?

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#1658974 - 02/01/12 03:02 PM Re: insurance disclosure cricket
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
This disclosure is not on the universal note. When we use this note for a business purpose loan to an individual

Reg Z would not apply to these loans nor would the Consumer Protection in Sales of Insurance requirements apply.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1658978 - 02/01/12 03:07 PM Re: insurance disclosure Dan Persfull
HR Banker Offline
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So the whole need to a customer acknowledging whether or not they want credit life is entirely a Reg. Z issue? There is no other reason to have them sign anything?

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#1658998 - 02/01/12 03:21 PM Re: insurance disclosure cricket
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
There is no other reason to have them sign anything?

Not from the Reg Z or the Consumer Protection in Sales of Insurance requirements. However, the sale of any insurance product is generally governed by the applicable state's Department of Insurance regulations. You need to be sure you are within state law requirements.

As an example in IN each loan officer that solicits/sells a credit insurance product must be a licensed insurance agent.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1659007 - 02/01/12 03:28 PM Re: insurance disclosure Dan Persfull
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Thanks for the help!

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#1659100 - 02/01/12 04:52 PM Re: insurance disclosure cricket
Oursisnottoreasonwhy Offline
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Oursisnottoreasonwhy
Joined: Nov 2004
Posts: 503
Central Illinois

GLBA PART ยง 343.40 What you must disclose.

(a) Insurance disclosures. In connection with the initial purchase of an insurance product or annuity by a consumer from you, you must disclose to the consumer, except to the extent the disclosure would not be accurate, that:.....

(b) Credit disclosure. In the case of an application for credit in connection with which an insurance product or annuity is solicited, offered, or sold, you must disclose that the bank may not condition an extension of credit on either:

(c) Timing and method of disclosures.(1) In general. The disclosures required by paragraph (a) of this section must be provided orally and in writing before the completion of the initial sale of an insurance product or annuity to a consumer. The disclosure required by paragraph (b) of this section must be made orally and in writing at the time the consumer applies for an extension of credit in connection with which an insurance product or annuity is solicited, offered, or sold.

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#1674036 - 03/06/12 09:55 PM Re: insurance disclosure cricket
Queen Mum Offline
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Queen Mum
Joined: Mar 2001
Posts: 3,920
OK
OK, this last reply has me confused. It states that you must have it in writing, but....is the catch the word "consumer"? So if it is on a commercial loan to an individual do you have to have it in writing or not?

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#1674042 - 03/06/12 10:02 PM Re: insurance disclosure Queen Mum
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
See my post about 4 or 5 posts above yours.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1674045 - 03/06/12 10:10 PM Re: insurance disclosure cricket
Queen Mum Offline
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Queen Mum
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Posts: 3,920
OK
Thanks. It's just that the last post above me started to confuse me.

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#1705486 - 05/31/12 10:41 PM Re: insurance disclosure cricket
Angela @ FNB Offline
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Angela @ FNB
Joined: Mar 2012
Posts: 24
Arkansas, USA
I know when to use it...

Does anyone know where I can find a sample of an insurance notice? Or even a combined sample notice for selling consumer insurance products and a credit insurance products?
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#1705563 - 06/01/12 01:40 PM Re: insurance disclosure cricket
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Your software vendor should have it as part of their documentation set.
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The opinions expressed are mine and they are not to be taken as legal advice.

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