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Insurance

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Visit our Insurance section of our website or visit our contact page and submit your question through the "Who can help me?" link or call one of our financial experts at any of our three branches.

What are the categories of risk for an individual?
What is the purpose of life insurance?
What are the two basic types of life insurance?
What is Credit Insurance?
What is Credit Disability Insurance?
What are some of the features of Credit Disability Insurance?
What is the purpose of Mortgage Insurance?
What is MemberPlan™?
Who sells insurance?

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1. What are the categories of risk for an individual?

Individuals face the following three categories of risk:

Income - Unexpected events that affect the individual's ability to earn a living or provide income.
Property Risk - Unexpected events which can damage or destroy personal property such as theft or fire.
Liability/Civil Risk - Injury to another party or damage to property of others.

2. What is the purpose of life insurance?

People buy life insurance to protect their survivors against the financial consequences of catastrophic loss: the death of a parent; spouse or partner who is the prime income provider. Life insurance can be used to:

Replace the income generated by a primary income provider
Pay off debts, such as mortgages, at death
pay expenses such as outstanding taxes, funeral costs
Overcome financial hardships which occur with the death of a care giver (e.g., a mother who is at home full time raising the family)

3. What are the two basic types of life insurance?

Term Life Insurance - provides "no frills" protection for a specified period of time. It is priced and designed to pay the face amount of the policy if the insured dies within a certain period of time, typically 5, 10 or 20 years. A 10 year term policy would pay the face value (the amount of the policy) if the insured dies within 10 years of taking out the policy. If the policyholder died beyond the 10 years without renewing the policy, nothing would be paid either to a survivor or the estate. Term insurance is used when the need for insurance is only for a certain period of time. Usually, these policies are renewable at the end of the term, and some term life policies can be converted to another type of insurance should the policy holder choose to change.

Term insurance is initially less expensive then permanent life insurance. It is always less expensive then whole life insurance if all factors are the same. This is because whole life insurance is made up of a term insurance element plus a savings element.

Permanent Life Insurance - is designed and priced to pay a benefit at death, whenever that is. In other words, there is no term attached to these policies. Permanent life insurance protects the policyholder throughout his/her life, assuming all of the premiums have been paid. There are two main types of permanent insurance: Whole and Universal.

Whole life insurance is based on level premiums, the amount of which is determined by the insured's age at inception of the policy. Whole life simply means that you pay premiums for your whole life. The younger the insured, the lower the premium. Here, the policyholder pays the same premium for the entire payment period irrespective of their age. The premium is more than is needed to cover the risk of death in the early years of the policy, and less than is needed in later years. The extra amount paid in early years accumulates in "policy reserves" earning interest which then supplements future premium payments to cover the higher risk of death in later years. These reserves also enable insurance companies to provide additional features to policyholders. For example, policy holders can borrow against the accumulated cash value in the life insurance policy, cancel the policy and receive a cash payout.

Universal life insurance differs from the whole life insurance primarily in that the policyholder has control over the investment portion of the policy. The policyholder can pay additional cash so that the investment portion grows more quickly.

4. What is Credit Insurance?

Credit insurance is life insurance to retire the loan balance on the death of the borrower. The primary benefit of credit insurance to you is the assurance that an outstanding loan will not become a burden to their family or have to be paid with proceeds from the estate.

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5. What is Credit Disability Insurance?

The purpose of credit disability insurance is to ensure that payments are continued to the lending institution in the event that the insured borrower becomes disabled in a way that affects his/her ability to repay the loan (e.g., due to loss of or severe reduction of income).

6. What are some of the features of Credit Disability Insurance?

A maximum monthly payment (sufficient to cover most personal loans)
60-month benefit payment program; 120-month benefit program also available
Low monthly premium
No evidence of insurability required. Usually there are some health-related questions on the application. Failure to disclose a health problem can result in a void policy. This means that the premium will be refunded, but that no death or disability benefit is paid. The insurer relies on correct and complete answers to questions on the application.
Benefits are paid regardless of other income
Loan payments are made directly to OMISTA Credit Union
Joint coverage is available

7. What is the purpose of Mortgage Insurance?

The purpose of mortgage insurance is to cover the balance outstanding on a mortgage at the time of the borrower's death. This should not be confused with 'home owner's insurance' which is property insurance covering houses, outbuildings, and personal property against loss or damage. Mortgage insurance covers only the outstanding balance of your mortgage.

8. What is MemberPlan™?

Founded by CUIS and the Co-operators, it is a group insurance plan for Credit Union owners. MemberPlan™ provides the insured with personal life insurance, dependent life insurance, prescription drug benefits, semi-private hospital coverage and extended health care benefits. Options include dental benefits, long-term disability insurance as well as additional life insurance for owner and spouse. MemberPlan™ rates are very competitive and usually much lower than a person could attain on an individual basis.

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9. Who sells insurance?

If you have any questions about our insurance products please contact an OMISTA expert at one of our branches, or your insurance representative, Ozzie MacKay at 858-7909. To develop an insurance plan that meets your needs and objectives, you can meet with Ozzie MacKay, and design the most cost effective plan for you.

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