St. Paul, Minnesota's ""Securian Financial Group"":http://www.securian.com recently unveiled a new debt protection program, Payment Assurance, which cancels or suspends a borrower's loan payment for up to six months if they lose their income due to involuntary unemployment.
A spokesperson for Securian explained to DS News that the Payment Assurance protection is available on first mortgages, in which both the loan and servicing are retained by the financial institution, as well as closed and home equity loans, such as second mortgages. As a non-contributory program, Payment Assurance allows a financial institution to cover all or select loan portfolios at no charge to the borrower.
Kristi Nelson, actuary and product development director for Securian Financial Group, explained, ""This program is paid for by the lender and complimentary to the borrower. Securian Payment Assurance provides a competitive marketing advantage by providing a way to attract more loans, reduce loan delinquency, and protect borrowers across multiple loan types.""
""Figures released Friday"":http://www.bls.gov/news.release/empsit.nr0.htm by the U.S. Labor Department show that 345,000 jobs were lost in May. Although this number represents a slowing in the pace of job losses, the unemployment rate still climbed to 9.4 percent - its highest level in a quarter-century - and economists say they expect job losses to continue to rise through the rest of the year.
According to Nelson, involuntary unemployment is one of the most significant causes for loan delinquency right now. Nelson added, ""Financial institutions that offer Payment Assurance can keep loans out of the collection queue and better manage lending risk in this challenging economy.""
Some may liken Securian's new product to the income loss protection programs that many automakers are now providing, but the company says its Payment Assurance offers better features for financial institutions, such as coverage for the entire term of the loan as opposed to the typical automakers' first-year protection. Securian also offers a higher monthly benefit - up to $1,500.
""Securian Financial Group, Inc."":http://www.securian.com was founded in 1880 and has provided financial institutions with insurance, debt protection, loan documents, and marketing services for more than 50 years. Securian and its affiliates serve more than 4,000 financial institutions across the United States.