Enabling Members to Access Payment Protection

Economic uncertainty has triggered significant changes in financial decision-making behavior among more than 80% of consumers, according to a December 2022 report from LIMRA.

Helping consumers take steps toward financial security requires simple and well-placed access to education and relevant services. Take payment protection, for instance. New consumer research conducted by TruStage uncovered a significant gap between the number of members who would be interested in payment protection and those who recalled being offered it during their loan process:

• Sixty-four percent of consumers would be interested in obtaining payment protection products (Credit Insurance, Debt Protection, GAP, MRC, etc.) in conjunction with their loan if given the option.
• Sixty-nine percent of personal loan applicants and 48% of auto loan applicants don’t recall being offered payment protection.

Frictionless, digital experiences make it easy for consumers to discover, learn about and opt into these offerings. Integrating these experiences seamlessly into the lending process is essential for credit unions looking to meet demand for these solutions.

Economic Uncertainty Drives Increased Payment Protection Relevance

Payment protection solutions are among the financial security products experiencing increases in consumer relevance in recent years. There’s been a nearly 70% growth in the likelihood to purchase payment protection over the last four years, according to TruStage’s 2023 Consumer Lending Preferences Research. Further, according to the same study, eight in 10 consumers reported they worry about not being able to make their loan payments due to unexpected expenses and life events. Consumers are most concerned about unexpected expenses, high cost of car repair, a life event/change in their household, and sickness or injury impacting their ability to make payments.

Payment protection helps reduce risks for members while providing credit unions crucially important non-interest income and protection against delinquencies. To protect member and credit union finances, effectively educating members through compelling messaging is essential.

Displaying interactive content early and often throughout the loan process increases understanding of how payment protection works – it boosts awareness and recall. By placing education late in the application when members are done with forms, interest in learning more about products has been as high as 40% of credit union loan applicants (source: TruStage Lending API Database: Total engagement for all products with MeridianLink, April 18-May 18, 2023). This interest sets the stage for easier and richer conversations about financial security as the application process progresses.

Satisfaction at the ­Confluence of Human and Digital Consultation

Consumers are not only more interested in payment protection products, they’re also initiating their search digitally, without speaking to a service representative. According to recent TruStage surveys, nearly half of all direct auto loans begin digitally, with nearly 12% funding completely without human intervention. That means building strong multi-channel experiences that deliver the right products and messages at the right times through a member’s application process is essential.

Technology integration with APIs (application programming interfaces) is one way credit unions can reach members where they are looking to improve the rates of product adoption. The behind-the-scenes integration also allows credit unions to have the most up-to-date, compliant and personalized education on the products they endorse. The systems can deliver the relevant types of payment protection, cost estimates and key details about benefits that are based upon each member’s specific lending needs.

Not only do these integrations need to be seamless to the member, but they must be easy for the credit union to activate. Our current integration takes about three to five minutes for the credit union administrator to enable, according to internal TruStage reports, ensuring that making member experiences better is not a burden for busy credit union tech teams.

Layering high-touch human consultation offered by credit union lending teams on top of convenient digital tools helps enhance the take rates of financial products. This, in turn, grows non-interest income, helps reduce financial risks for more consumers and deepens the member-credit union relationship.

Lisa Pavelski Director, Lending Digital Capabilities TruStage Madison, Wis.