Credit union members have reacted angrily to moves by some lenders to reduce one of their key benefits—death benefit insurance according to a recent article in the Independent.

Many credit unions offer the benefit and share insurance. If a member dies, the union provides a payment and this does not cost other members anything. The unions have said that the high cost of providing the cover means they have had to cut the amount of money they pay out, resulting in members threatening to move unions.

The insurance cover is regarded as key benefit to membership, particularly for older members. It is a unique benefit to credit unions.

 

Costs of funerals

The pay-out is a fixed sum when a credit union member dies which will contributes towards the cost of the funeral. In recent years, the cost of the cover has soared. The article quoted one credit union in Dublin that has seen its cover increase from €1.3 million a year to €1.8m in just three years.

The credit union, Savvi, has reduced its benefit payments from €3,250 to €1,950. The move resulted in protests at the credit union’s annual general meeting in January. The decision to reduce the level of cover had been made without being put to a vote.

Savvi’s board of directors said the spiralling cost of cover, combined with a reduction in income because of poor investment market returns, meant it could no longer afford to provide the same level of cover.

Lowered cover

The Irish League of Credit Unions said in the article that eight of its members had needed to reduce the level of death benefit insurance last year, and seven of the credit unions lowered their cover in 2017.

A spokesperson for the league told the Independent blamed the reduced investment returns, rising costs and the need to develop new services for the state of play. Death benefit insurance, the spokesperson added, was an optional produced offered by credit unions and could be changed at any time.

Recent figures have shown that funerals in Ireland cost an average €4,062. A poll undertaken by Post Insurance in 2016 found that County Clare’s funerals were the most expensive at €5,000, while the cheapest were offered in Wexford at €3,408. Coffin costs varied from €1,100 to €2,000, and burial plots were most expensive in Dublin at €11,766 and cheapest in Clare at €525.

 

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