Even the best drivers hit bumps in the road. Just like a winning racecar driver needs a quality pit crew to keep them speeding ahead on the track, your borrowers need a safety net to help keep their f...
Lending
|
3 min read
Even the best drivers hit bumps in the road. Just like a winning racecar driver needs a quality pit crew to keep them speeding ahead on the track, your borrowers need a safety net to help keep their finances stable should the unexpected happen. Payment Protection does just that, protecting both the borrower and your institution when qualifying life events impact your borrower’s ability to make their loan payments.
Buckle Up with Risk Management
Risk management acts as your financial institution’s spotter on the race toward financial stability, acting as your eyes and ears as you race down the unpredictable track. Risk management products and services help your institution confidently identify, manage, and mitigate the risk in your lending portfolio.
Where does Payment Protection fall into all of this? Life is unpredictable, meaning that your borrowers can sign an agreement with every intention of upholding it, but when a life event prevents them from paying, both your institution and the borrower are financially at risk. Payment Protection shields your borrower’s finances when the unexpected occurs, ultimately protecting your business and your borrower’s financial stability.
What is Payment Protection?
Payment Protection is a product your financial institution can offer borrowers that benefits both of you. Should qualifying life events happen to your borrowers, Payment Protection is a product that aids them in paying off debts in case they are unable to make their regular payments. It is a benefit that protects the borrower’s payments if they are unable to work due to:
- Illness
- Death
- Unemployment
Offering Payment Protection options to your borrowers helps ensure their financial stability while growing your non-interest income, building stronger borrower-lender relationships, and helping your financial institution’s risk mitigation efforts.
Types of Payment Protection
There are two main types of Payment Protection. These include:
Debt Cancellation
Debt Cancellation offers your borrowers multiple benefits and peace of mind in the event of:
- death
- hospitalization
- disability
- involuntary unemployment
- accidental death of a dependent
- family leave
Debt Cancellation is a contractual agreement that is solely between the borrower and lender. This means that, if a covered life event occurs, the lender forgives a portion or all of the borrower’s debt, helping keep their ride smooth and financially secure while a contractual liability policy from SWBC P&C reimburses you for the payment or loan balance forgiven.
This form of Payment Protection does not just keep your borrowers happy. It can also boost your financial institution’s race around the track by helping to minimize your loan portfolio’s risk of default, providing your institution with non-interest income, and boosting the borrower-lender relationships your institution cultivates.
Credit Insurance
Credit Insurance, on the other hand, is a more comprehensive coverage that is regulated by the state’s insurance department and contracted between three parties — the borrower, the lender, and the insurance company.
This form of Payment Protection simultaneously generates non-interest income for your financial institution while strengthening the relationship you are building with your borrower with trust and integrity.
Should death, injury, illness, or involuntary unemployment impact your borrower, Credit Insurance grants protection for their loan. This form of insurance covers the borrower’s and/or co-borrower’s loan payments in the event of disability or involuntary unemployment. However, in the event of death, the insurance will pay off the outstanding balance in full.
Payment Protection for Everyone in the Driver’s Seat
As your borrowers navigate the twists and turns of their financial journey, they must learn to expect the unexpected. Payment Protection is the spotter they need to continue their race down the track when life throws them a road bump.
These offerings don’t just boost the borrower experience, although that in itself is a significant boost fueling your race to success. They also help your financial institution manage the risks in your lending portfolio, ensuring that temporary setbacks and worst-case scenarios don’t impact your stability and borrower-lender relationship.
Help your borrowers buckle up with SWBC’s Payment Protection products. From Debt Cancellation coverage to Credit Insurance, we have all you need to help your borrowers protect their loans, no matter the bumps along the way.
Let Us Know What You Thought about this Post.
Put your Comment Below.