LI Federal Credit Union Life Insurance on Savings: What Members Need to Know

What Is Life Insurance on Savings?

Life insurance on savings is a product that allows a member to use their savings account as collateral for a life insurance policy. If the member passes away, the policy pays a benefit that can cover the outstanding balance of the savings account, ensuring that the member's family is not burdened by debt.

LI Federal Credit Union's Offering

LI Federal Credit Union (LI FCU) offers a life insurance on savings plan tailored for its members. The plan is designed to complement the credit union's savings products, providing a safety net while preserving the growth potential of savings.

Key Features

• Coverage tied directly to the member's savings balance.
• Premiums are fixed and can be paid monthly or annually.
• Benefit is paid only if the member's savings balance is less than the policy value at the time of death.

How It Works

When a member enrolls, the credit union calculates a policy value based on the current savings balance plus a small percentage to account for growth. The member pays a modest premium to maintain the policy. If the member dies, the insurance company pays the policy value to the credit union, which then covers the member's savings balance. The remaining amount, if any, goes to the named beneficiary.

Benefits for Members

• Protects family from having to liquidate savings prematurely.
• Provides a predictable, fixed premium structure.
• Can be integrated with other credit union benefits such as auto loans and mortgages.

Eligibility and Application Process

Eligibility criteria are straightforward:

• Must be a current LI FCU member with an active savings account.
• Age range typically 18-70, though exceptions may apply.
• Must complete a brief application and provide proof of identity.

The application can be submitted online through the credit union's member portal or in person at any branch. Once approved, the policy is activated within 48 hours.

Coverage Limits and Premiums

Coverage is capped at 150% of the current savings balance, ensuring that the policy remains affordable while offering substantial protection.

Comparing to Traditional Life Insurance

Unlike term or whole life policies, life insurance on savings:

• Is directly linked to an existing savings account.
• Does not require a medical exam.
• Offers a straightforward payout structure.

Potential Drawbacks

While the product offers clear advantages, members should consider:

• Premiums may be higher than a low‑cost term policy if large savings balances are involved.
• The policy does not build cash value; it only protects the existing balance.

How to Maximize the Benefit

To get the most out of the policy:

• Maintain a consistent savings balance; fluctuating balances can affect coverage value.
• Review the policy annually to adjust coverage if your savings grow.
• Combine with a traditional life insurance policy for broader coverage.

Member Success Stories

Several LI FCU members have reported peace of mind knowing that their savings will not become a financial burden for their loved ones. One member, a 45‑year‑old parent, noted that the policy "gave us confidence that our children's future is secure."

How to Get Started

To enroll:

• Log in to the member portal and navigate to the "Life Insurance on Savings" section.
• Fill out the application form and submit.
• Choose your premium payment plan.
• Confirm the policy and receive an electronic confirmation within 48 hours.

For any questions, members can contact LI FCU's customer service at 1‑800‑LI‑FCU or visit a local branch.