PNC Bank will terminate all credit insurance on loans
Coverage for policies will cease on Sept. 30
Jeffrey and Jean Krieger were caught off guard by a letter from PNC Bank in mid-July announcing the optional life insurance policy they’ve owned for nine years to cover the balance of a $65,000 home equity loan if either of them died will be terminated at the end of September.
“I bought the policy to protect me and my wife,” said Mr. Krieger, 66, a retired union electrician. “They either need to continue my life insurance contract or apply the money I paid for that insurance to my loan.”
The Banksville residents say they were under the impression their insurance coverage was guaranteed for the life of the loan. The insurance premiums they paid to PNC Bank, which were added to their regular monthly loan payments, totaled more than $5,600, according to their own calculations.
But PNC Bank said the life insurance policy that the couple purchased along with their home equity loan does not provide permanent lifetime coverage. It is a term policy under which premiums are paid and coverage is received during a defined period of time.
The bank no longer wants to be in the credit insurance business.
“While PNC has made the decision to exit the optional insurance business, the bank has fully honored the policy by providing coverage through the paid term for all individual participants,” said a statement released by the Pittsburgh-based bank on Tuesday.
“PNC regrets that we cannot discuss details of Mr. Krieger’s situation, as we do not comment on individual and specific
complaints,” the statement said. “As part of our process for thoroughly reviewing and promptly responding to complaints, our team has been in contact with Mr. Krieger directly to further discuss this matter.”
The bank said it is dropping optional life insurance on all of its loan products.
That includes first mortgages, home equity mortgages, car loans, credit cards, personal loans and others. The bank didn’t say how many customers will be affected by the policy change, but theoretically all of its loan customers are impacted.
PNC said it notified all of its loan customers who purchased credit insurance policies through the bank that all insurance coverage will end Sept. 30.
In a letter dated July 17, PNC informed the Kriegers that effective Sept. 30, their credit insurance coverage underwritten by Securian/ Minnesota Life will be terminated. “The Group Master Policy under which this coverage is written is being canceled by PNC Bank, National Association in accordance with the policy’s terms,” the letter stated.
Jeff Bakken, public relations manager for St. Paul, Minn.-based Securian/Minnesota Life, said PNC ended its relationship with the company.
“Sometimes we can provide insurance coverage directly to consumers, but there is no way it can be done in this case because the home equity loan is tied to the bank,” he said. “The insurance premium goes up or down based on how much they owe.”
Mr. Krieger said he took his complaint about the insurance cancellation to the highest levels of PNC’s customer service department, but he has gotten nowhere.
“They told me there’s no guarantees in life,” he said.
Loan officers often ask borrowers if they would like to purchase credit insurance while applying for a mortgage or other type of loan. Credit insurance will pay off the loan if the borrower is unable to make the payments.
The terms of credit insurance policies vary, but can cover major life events such as death, disability or job loss. Credit insurance usually is optional, which means you don’t have to purchase it from the lender.
Mr. Krieger said the couple’s insurance premiums started out at around $60 a month, but declined over the years as the balance of the loan went down. They are currently paying $47 a month now that the loan balance is down to about $44,000.
He said he took the bank loan officer’s word that the life insurance was guaranteed as long as they had the loan, rather than read several pages of tedious legal language contained in all the documents he and his wife signed for the loan.
“Everybody getting a home equity loan should bring their attorney with them,” Mr. Krieger said. “There’s 10 pages of fine print. If you tried to read it, it would take five hours. You would never even be able to do a loan.”