Anger as credit unions move to lower insurance death benefits
Credit union members have reacted angrily to moves by a number of the lenders to reduce a key insurance benefit.
Most credit unions offer death benefit insurance and share insurance. These provide a payment when the member dies, at no cost to the members.
But the high cost of providing the cover has seen credit unions slash the amount they pay out. This has prompted some frustrated members to threaten to move credit unions.
The insurance cover is seen as a key benefit of credit union membership, particularly for more senior members.
Death benefit insurance is unique to credit unions. A fixed sum is paid when a member dies to help defray funeral expenses. But the cost of the cover has rocketed.
One credit union, Savvi in Dublin, has seen the cost of its cover jump from €1.3m a year to €1.8m within three years.
This prompted it to reduce the death benefit insurance payments from €3,250 to €1,950.
This caused a storm of protest at its annual general meeting last month. The board of directors took a decision to reduce the level of cover without putting it to a vote of members.
Savvi argued the spiralling cost of the cover, along with a reduction in income due to poor investment market returns, meant it was no longer able to afford the same level of cover as before.
The Irish League of Credit Unions said eight of its member credit unions reduced the level of death benefit insurance last year, and seven lowered the cover in 2017.
A spokesperson for the league said reduced investment returns and rising costs, and the need to develop new services, meant some credit unions were reducing the level of death benefit cover.
Death benefit insurance is an optional product that credit unions offer and is subject to change at any time, the league said.