IN this economic uncertainty increasing numbers of borrowers are taking out insurance cover on their loans.
Research shows, however, that credit union customers are more reluctant than most in this area with just 5% of its borrowers opting for loan protection.
That contrasts sharply with 30% for bank customers where growing numbers are taking out cover on their debts.
With so much uncertainty in the air and job insecurity the need for individuals to insure loans was never greater, said Paul Walsh, chief executive, of CUNA Mutual, which services the credit union arm of the banking sector.
CUNA has responded to the need for such cover and has developed a practical and cost effective payment protection insurance product that covers the repayments on the loan for up to 12 months.
In the current environment borrowers are concerned about repaying loans and bills if they lose their job or can’t work because of illness, said Walsh.
This has proved to be very popular in credit unions throughout the country and "we are providing a programme designed to inform credit union staff in all aspects of Payment Protection Insurance", said Walsh.
The company’s staff provides guidance and advice on this type of product to the CU movement spelling out the features that PPI offers and how credit union staff can best communicate those plusses to members, he said.
This was never more necessary given the hundreds of stories of customers losing jobs or the bread winner passing away creating major headaches for those who have been unable to meet their repayments, Walsh said.
CUNA Mutual charges €6.49 for every €100 of the monthly repayment so the cost of cover on a €200 monthly repayment is under €13 a month, he said.
Walsh has called on all Irish lenders to inform customers on the benefits of payment protection insurance.
People need to be told about the protection available to them so they can make up their own minds on what to do, he said.
Walsh said the credit union movement has been "very slow to move on this in the past".
When properly sold the cover offered is good for all, he said.
"It is good for the borrower, helping him or her to avoid financial stress if they lose their job, or can’t work because of illness, and it also protects the lender."