5 Steps to Ensure Payment Protection, well, Protects Your Members

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(Last Updated On: November 22, 2020)

In previous articles, we discussed the 5 Steps to Protecting Members Using Your VSC program and also with GAP & Depreciation Coverage. Then we looked at how Payment Protection specifically is a tool for Financial Empowerment.

Here, we will cover the 5 steps you can take to help borrowers by way of your Payment Protection products.

5 Steps to Protect Members With Payment Protection

4 Staircases
There’s 5 here. Look closely.

The biggest obstacle to members getting the protection they might need is awareness. If you don’t know about it, it’s tough to get it. And more importantly, it’s easy to just say, “no thanks” if casually offered.

How can you and your team share worthwhile guidance while maintaining the trust and connection prized by your institution? It’s about following a consistent process that begins long before ever interacting with a borrower.

We put it into 5 steps to make planning and implementation approachable.


  1. Staff Education
  2. Introducing Payment Protection Early
  3. Loan Approval & Subsequent Engagement
  4. Loan Closing Conversation
  5. Avoid Buyer’s Remorse After Loan Closes

The good thing with these steps is that they don’t have to be consecutive. Ok, staff education needs to be first, but if you don’t have the resources to fulfill the next two today, that’s fine. Focus on education (“in-person” and digital) and communication throughout the process.

And, as always, be open to suggestions from your team and even feedback from borrowers. Reach out to those who have your Payment Protection products. Ask why they chose to add them to their loan. Then do the same with some borrowers who passed on the offer.

Inspiration comes from everywhere, staff and members included. You just have to ask!

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Step 1 – Staff Education

Coach and Baseball Junior Player
Who’s your coach?

Your staff goes through a lot of training. And every single item is important, or else you wouldn’t talk about it, right? So any product they share will have value for your borrowers.

For staff-sold Payment Protection, the first step is getting their perspective. Do they already have negative feelings about it? No feelings? To offer it properly, they have to care. (As an example, look at how I talk about VSC helping prevent negative financial spirals.)

Bottom line: Would they consider Payment Protection in their next vehicle loan? Would they recommend it for friends and family? Ask!

Depending on what they say, your response will vary. However, through our more than three decades of experience with Payment Protection programs, the most common “objections” are the cost and “there’s no need”. 

As we talked about in our other Payment Protection article, the need is real. They just don’t know…and that’s ok!

You can get them thinking on the right path by asking a few simple questions:

  • “Does your family depend on this vehicle?” 
  • “How would they make payments if your income stopped?”
  • “Would you like to leave this vehicle to your family debt-free?”

Training Matters

Female Gymnast and Coach
To get better, you have to practice. And learn from others.

If your provider offers regular training (with virtual access, it’s a lot easier to manage), you can practice scenarios with staff. Plus, it allows them to share any recent objections or questions they couldn’t answer. Empowering everyone to contribute results in better solutions.

During regular staff meetings as well as formal training, let your team brag! Managers love to share how FSRs have made tangible impacts on members’ lives. Celebrate these successes; it’s why you exist!

Plus, keeping the lines of communication open helps resolve issues before they grow into member complaints.

Finally, it’s about continuous self-guided education. Like what you’d get on a Learning Library provided by…oh wait, us! Here’s three appropriate articles on Payment Protection to get started:

Credit Insurance at Your Financial Institution (2020)

Payment Protection: Credit Insurance & Debt Cancellation

How Payment Protection Delivers Financial Empowerment

Payment Protection Cheat Sheet Cover

Discover the 5 Easy Tips for Payment Protection Cheat Sheet. Do borrowers need it? How does an “agnostic” platform help? Debt Cancellation or Credit Insurance? This and more, inside!
Get the Cheat Sheet

Step 2 – Introduce Coverage Early

As we meet with credit unions and others in the industry, a consistent theme is that digital transformation makes introducing your services early difficult. There’s truth in it, but also an acknowledgement that your current tools are insufficient.

Sure, the COVID-19 pandemic accelerated digital transformation, but it was already happening. And even when “normal” returns, a large portion of the shift away from in-person will remain.

That means your online, mobile, and remaining phone-originated applications are dominant.

For members who prefer the in-person experience, but cannot for safety reasons, encourage the phone conversation. It may not be super awesome digital, but it serves its purpose. And you know the value that conversation can provide.

During the call, your FSR learns about the needs and goals of the borrower, introducing them to your car buying service, both for convenience and to keep them close.

That’s also the perfect time to introduce your protection products. For this focus, the FSR can ask if the member has life insurance. Since around half of Americans do not, this is an easy way to recommend Payment Protection.

Even if they do, wouldn’t it be nice to know this is one less expense their family will need to consider? In that sense, it’s a bit like AD&D: A low cost, high benefit protection.

Meaningful Online Connections

Woman on Video Conference
Whether live or not, you can still build a professional relationship.

Online applications allow for a different kind of “conversation”. With drip emails (over the average duration between application and closing), you can focus on each protection product, starting with the greatest need (ie. The ones you see the most claims.).

Since the majority of your borrowers do it all on your website or app, this is one way to stay “face-to-face”. And how do you get the attention of someone on a computer or phone? Engaging video content. Regular content works, but video is better, especially in B2C.

One idea could be…

Exciting Explainer Video

Videos on Desktop - You're Special to Us
Just saying…

Stick a video like our “You’re Special to Us” Payment Protection into the loan application process to quickly plant a seed. It’s short and to the point. Plus, it integrates with a complete series for all your protection products.

Our Payment Protection explainer video is free, as in free lunch, or beer, or whatever is actually free. It doesn’t even matter which Payment Protection provider you have; it’ll work for them all. And it’s generic because we aren’t advertising to your members.

You can also include it on your website’s ancillary product descriptions and in the app. Some credit unions share videos on social media, and others display on their branch monitors (for those able to engage in branch services).

Unhappy with our video? You can always make your own. We won’t be insulted. Just make sure you connect with the pain points and benefits of your Payment Protection offerings.

Your goal is to ensure that loan closing isn’t the first time the member hears about Payment Protection and your ancillary products. Because if that’s the case, your conversions will be woefully low, and borrowers will go unprotected.

That’s not serving your members.

Testimonials

Stories are powerful. Thus, testimonials are effective pieces of content. Hearing how real people benefited from your Payment Protection programs and helped them keep their vehicles means a lot.

Drive more feedback by encouraging or rewarding members for sharing their experiences. Your Payment Protection has saved numerous members from deeper financial struggles. Make sure others know.

Member Awareness

You must ensure members:

  1. Know you offer Payment Protection (and other protection products)
  2. Understand at a basic level what it is
  3. Recognize the potential value as part of the loan

Your credit union benefits when your members are more aware of what you can do for them. In fact, everyone benefits, and that applies whether they finance through your direct or indirect channel.

Which brilliantly leads us into Step 3.

Step 3 – Loan Approval

Approved Stamp on Paper with Phone and Coffee

Your member’s loan application is approved! Now they make their financing decision and you just sit and wait. Not quite. Use the tools in your belt. Sure, not everyone will go for a direct loan. Some just want to do it at the dealer. That’s ok.

If your institution offers indirect lending, we’ve got tips for you, too.

Let’s start with the easier approach, direct lending:

Direct Loan

Even with automatic engagement, adding a human touch is valuable, whether that’s through phone, email, or text. Share your next recommended steps. Remember, they see the loan as a tool to get a car. You know it can be so much more.

How can you exceed expectations, while providing tangible benefits? (In this case, helping guard them from immense financial challenges if bad things happen.)

Car Buying Service

Your car buying service already helps save them time and money during their research. Our comprehensive section connects the dots from lending to searching to protection. Knowing they’re in the market lets you start the conversation.

Connect GAP, Depreciation, and Other Protection Products

Just because we’re talking about Payment Protection doesn’t mean you ignore the others. Frame it out as one part of your “Fully Protected Loan”. Connect the costs of repair with the costs of being disabled and unable to work. The financial challenge is similar.

When you connect the pain points together, you’re helping them to understand your protection products as one cohesive strategy. Then, they can choose which makes the most sense for them.

Indirect

Two Women Discussing Car in Dealership
Maskless? Must be New Zealand.

Not all members choose to go direct. And with your dealer network, that’s ok. This loan application came through a participating dealer.

What happens next depends on your dealer arrangements. Some institutions agree to not offer any ancillary products on indirect loans. Others call it fair game to discuss, while the borrower is free to reach out after closing for direct purchase.

Let’s assume your institution speaks to all members about your protection products. Since they went through indirect, how can you do any of the previous steps? That’s where your car buying service comes in handy.

This platform helps keep members close so you can share the appropriate information right when they enter the market. Now the conversations and emails can occur. Worried about priming members for easier sales at the dealer? Explain that their programs may differ.

You know dealers make around a quarter of their profits from the F&I office. Inside, the member is offered Payment Protection, GAP, possibly Depreciation, plus a menu of other protection products. Typically, they are more costly than those offered at your credit union.

About half the time, your indirect member purchases these services through the dealer, adding them onto the loan up to their approved amount. And many are content with what they receive.

However, if you followed the prior steps, they would know the benefit of purchasing through the credit union. They’d politely decline and contact your credit union to purchase after closing, if that’s something you’re equipped to do.

In other words, the more members you inform about your car buying service, the better chance you have of promoting and selling protection products (and growing your direct loan volume)!

Step 4 – Loan Closing

Woman Happy In Front of Computer
Yep, that easy! Wait, did you see the protection products?

Contactless closing is just swell! Simple, fast, and everyone wins! Only, it’s best at funding, not detailing your additional protection services. Which isn’t all that swell. It doesn’t have to be that way.

My own car loan was contactless. It went between online forms and a phone call. I’m not even sure if the latter was necessary or just a confirmation of the process moving forward.

The “offer Payment Protection” opportunity consisted of a screen I clicked past during the closing. “No thanks”, and that was it. They also had boring text descriptions of GAP and VSC. No videos. No testimonials.

The credit union didn’t even try to educate me on my risks.

Lost opportunities because their contactless closing didn’t truly serve the member.

You can do better.

Get Some Face(Time)

The traditional person-to-person closing is still the most efficient method of offering and selling Payment Protection. It’s just not practical right now. And the trend is moving away from it even without the risks from a pandemic.

Today, Zoom (or even just Skype and FaceTime) is part of people’s daily life. It’s not as good as in person, but it’s better than nothing. Consider setting an appointment to close the loan. Your FSR can walk the member through the process.

Man with Headset on Computer
Is your staff doing this now?

If a video call isn’t agreeable to them, you can still resort to that hand-held invention from Alexander Graham Bell.

And now you can have a real conversation on why Payment Protection matters for them. How you make the offer is critical. You’ll develop scripts that fit your membership, but here’s a starting point:

“As a member of ABC CU, you have various options surrounding this loan. It’s my responsibility to ensure that you know your risks and how these options can reduce or eliminate these risks. Does that make sense to you?”

Once again, it’s much easier to present your product if the member already knows it exists. If needed, you can again guide them to your short, engaging content (while suggesting pre-viewing in the invite).

Use your institution’s data to determine their pain points and assemble relevant benefits to explain why Payment Protection may make sense. It might even open up a conversation for life insurance.

Sales Tip: No one likes paying more. Protection products mean you pay more. So focus on extending the loan term to keep payments close or the same.

This can play a critical role in your sales penetration and product retention, and more importantly, help keep financially vulnerable members safe.

Step 5 – Avoiding Buyer’s Remorse

Loan’s booked. We’re done! Right?

Not quite. “Buyer’s remorse” can kick in after the borrower has time to settle down with their new vehicle. Maybe that extra protection seems less reasonable now? Especially if they took a second look at what it added to their monthly payment.

Remember, these plans (insurance or debt cancellation) may be refundable in certain states, so they can change their mind. There is generally a “free-look” period, wherein borrowers may receive 100% of their money-back.

Money Back Guarantee - Green
Great for borrowers. Also, not great for borrowers. Solve the riddle.

Given you know the value the protection offers, it would be a shame to refund it all two weeks later. After that period, borrowers may still cancel and receive a prorated refund.

Avoid this situation by performing a Post Sale. This helps reduce or avoid buyer’s remorse, while also ensuring everything about their loan is understood.

Reach out to your member a few days after closing, thanking them for doing business with your credit union. Take the opportunity to review their loan, reinforcing the benefits of their great rate and chosen protection products.

Use this conversation to explain your options for automatic payment, paperless statements, and more.

A good follow-up also helps build trust and loyalty, setting the stage to capture more wallet share. Yes, this is a perfect time to suggest a full financial review, so you can share other ways to save them money or simplify their banking.

Protecting Members Comes in Many Forms

There are plenty of articles discussing how COVID-19 changes all your expectations and plans. Yet your mission of protecting members is constant.

Working within different bounds, you can continue to help members. By following the above steps, your institution can maximize Payment Protection production. In so doing, you reduce member risk, guarding them from negative financial spirals.

Plus, your institution generates increased revenues while decreasing the likelihood of delinquency or repossession.

Follow our Learning Library updates (or just Subscribe!) for the rest of the series. Each focuses on your protection products with one eye on your member and the other on your continued success.

Joe Winn - CU Geek

Blogger. Speaker. Part-time Jedi.

Focused on helping your bank or credit union grow in the face of emerging challenges.