Saving in a Credit Union - life insurance

kuepper

I'm in my 70s and just been made aware I can join and save in  local credit union. I wouldn't expect any great dividend but when I looked at the benefits they seemed quite attractive: it pays out on death (to a max of £5000) 25% of monies saved between ages of 65-80 as an insurance benefit to a nominated beneficiary. It's actually 100% for any money saved before 65 but I'm too late for that..I'm not planning to die soon but putting in £20000 would turn into £25000 on my demise for my family and and I'd get some dividends during my lifetime.Seems a good opportunity.

Albermarle

 It seems an odd mixture of a savings account and life insurance and sounds even a bit suspicious ( scams come in various forms) or that there will be issues in the small print.
You will need to give us details of the credit union/deal on offer . 

daz378

Not seen  my credit union offer insurance,  offer loans and savings....I've been putting  30 pounds a month away for a few years now...straight from wages

Daliah

Interesting. Have you got a link to that Credit Union offer, please?

londoner62

There are several CU's that offer life insurance for example https://www.eslcu.co.uk/join-us/free-life-insurance/ but before signing up I would suggest confirming they are legit by using something like this https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/authorisations/which-firms-does-the-pra-regulate/2022/list-of-authorised-credit-unions/list-of-authorised-credit-unions-as-at-1-january-2022.pdf 

kuepper

Daliah said:

Interesting. Have you got a link to that Credit Union offer, please?

https://manchestercreditunion.co.uk/savings/insurance-benefits

kuepper

londoner62 said:

There are several CU's that offer life insurance for example https://www.eslcu.co.uk/join-us/free-life-insurance/ but before signing up I would suggest confirming they are legit by using something like this https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/authorisations/which-firms-does-the-pra-regulate/2022/list-of-authorised-credit-unions/list-of-authorised-credit-unions-as-at-1-january-2022.pdf 

Yes that's the same life insurance benefit as https://manchestercreditunion.co.uk/savings/insurance-benefits

JamesRobinson48

Evidently a number of CUs offer life insurance linked to their members' savings. Those I've seen are all on substantially the same terms, so possibly they all use the same insurance company.

Not seeking to discourage anyone, but I don't believe this is the 'Holy Grail' of free life insurance for the elderly that it might appear at first sight.

As the rubric makes clear, your beneficiaries would only be paid out in proportion to your savings in the CU at the date of death. So if funds are withdrawn near the end of life, for example to pay for care, the potential payout is reduced or forfeited.

Generally the Manchester pays no interest, and its annual dividend rate has lately been 0.5%.  Compare that with interest rates available elsewhere, and in effect you'd be paying a significant annual price for this insurance benefit.

The Manchester's web pages don't seem to mention any exclusions or detailed T&Cs set by the insurance company.  Certain other credit unions indicate that their own scheme does have exclusions (e.g. death caused by previously existing conditions, and some others) and others seem a bit cagey. So one would wish to see the small print.

Also presumably the CU renews this insurance cover one year at a time, and the insurance premium would be negotiated annually based on the insurance company's claims experience.  Supposing I'm right, it's entirely possible that the terms of cover (e.g. the maximum £ payout and/or the % payout) might have been curtailed by the time one dies, in order to keep the annual insurance premiums affordable for the CU.  

Looking at the financial statements of the Manchester and one other CU, the total annual cost to the CU of buying insurance seems on the low side given their number of customers.   Insurance companies obviously aim to make a profit, so I can only assume that the incidence and cost of successful insurance claims made on behalf of deceased members must also be rather low.  Which brings one back to the subject of what exclusions or detailed T&Cs there might be.

By all means join a CU, and this benefit might be perfect for you. But personally I have reservations if this benefit should tip the scales very much.  I could see more promising homes for £20,000 of my savings.

Purely a personal opinion, 'Do Your Own Research'.

Daliah

Nothing I can add to the excellent assessment by JamesRobinson48.

kuepper

JamesRobinson48 said:

Evidently a number of CUs offer life insurance linked to their members' savings. Those I've seen are all on substantially the same terms, so possibly they all use the same insurance company.

Not seeking to discourage anyone, but I don't believe this is the 'Holy Grail' of free life insurance for the elderly that it might appear at first sight.

As the rubric makes clear, your beneficiaries would only be paid out in proportion to your savings in the CU at the date of death. So if funds are withdrawn near the end of life, for example to pay for care, the potential payout is reduced or forfeited.

Generally the Manchester pays no interest, and its annual dividend rate has lately been 0.5%.  Compare that with interest rates available elsewhere, and in effect you'd be paying a significant annual price for this insurance benefit.

The Manchester's web pages don't seem to mention any exclusions or detailed T&Cs set by the insurance company.  Certain other credit unions indicate that their own scheme does have exclusions (e.g. death caused by previously existing conditions, and some others) and others seem a bit cagey. So one would wish to see the small print.

Also presumably the CU renews this insurance cover one year at a time, and the insurance premium would be negotiated annually based on the insurance company's claims experience.  Supposing I'm right, it's entirely possible that the terms of cover (e.g. the maximum £ payout and/or the % payout) might have been curtailed by the time one dies, in order to keep the annual insurance premiums affordable for the CU.  

Looking at the financial statements of the Manchester and one other CU, the total annual cost to the CU of buying insurance seems on the low side given their number of customers.   Insurance companies obviously aim to make a profit, so I can only assume that the incidence and cost of successful insurance claims made on behalf of deceased members must also be rather low.  Which brings one back to the subject of what exclusions or detailed T&Cs there might be.

By all means join a CU, and this benefit might be perfect for you. But personally I have reservations if this benefit should tip the scales very much.  I could see more promising homes for £20,000 of my savings.

Purely a personal opinion, 'Do Your Own Research'.

Many thanks, lots of things there that had never occurred to me and show why MSE forum is so useful