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Credit Insurance Costs 9.1% of the Amount Financed, According to CFPB Data

In this chapter
  1. The line on the contract that said "insurance"
  2. Why there is no line for it on your monthly payment
  3. What it costs on a real loan
  4. What comes back
  5. Why nobody has told you since the day you signed
  6. Why your credit card tells you and your car loan does not
  7. Four things the one disclosure you got may not have shown
  8. Where this is illegal, and where it is not
  9. What you can actually do
  10. What is not known, and should not be guessed
  11. Where Plenee fits
  12. The short version

The line on the contract that said "insurance"

If you have financed a car or taken an installment loan, there may be a charge on that contract for credit life and credit disability cover. One number. Possibly labeled just "insurance."

You will not find it on any statement since. Not because it was hidden after the fact. Because there is no statement line for it to be on, and no law that requires anyone to mention it to you again.

This chapter is about what that charge does, what it costs, and what comes back.

One thing first, because it decides everything else. Buying it was not a mistake about arithmetic. If you have people depending on you and no savings behind you, a product that clears the loan if you die or cannot work is answering a real problem. The problem is real. This is about what you were charged for the answer.

Why there is no line for it on your monthly payment

The premium was not added to your payments. It was added to the loan.

The charge is worked out once, at signing, as a rate per $100 of the amount being insured. That figure goes into the amount financed. From that moment it is principal, like the car is principal.1

Which means you pay interest on it, every month, for the life of the loan.

That is not an inference. A federal regulator's 2023 order against a large installment lender describes the mechanism in its own words: the premiums "are added to Customers' loans and are subject to a finance charge," and the lender "pays the credit-insurance premiums… to the products' providers but keeps the interest charged on the premiums and fees."2 A different federal agency charged the same practice as a deception more than twenty years ago.3

So there is no separate line in your payment. The payment is one number, and part of it is interest on an insurance policy.

What it costs on a real loan

Here is the arithmetic on an average new-car loan, using a state's own filed rates. Every input is a published figure.

Amount financed $40,582, at 7.65% over 60 months.4 Credit life at $0.56 per year per $100 insured, credit disability at $4.21 per $100.5

Single premium$3,059.25
— credit life$1,221.96
— credit disability$1,837.30
Monthly payment without it$816.08
Monthly payment with it$877.60
Difference each month$61.52
Premium$3,059.25
Interest on the premium$631.91
Total paid over five years$3,691.17

That is 9.1% of the amount financed, for a product that is optional.

And $61.52 a month is exactly the size of thing that gets agreed to at a desk at the end of a long afternoon. It is not a number that sounds like $3,691.

Four reasons that figure is conservative rather than alarming. The 60-month term is shorter than the national average of 66 months, and a longer term costs more. The interest rate is a bank rate, and this product concentrates where rates are higher. The disability plan priced here is not the worst available, it is the most common. And filed rates vary more than three-fold between states — the same cover costs substantially more in some than the figure above.6

What comes back

The regulators set a benchmark for this, and it is their number, not anyone else's.

The model rule says benefits are reasonable "if the premium rate charged develops or may reasonably be expected to develop a loss ratio of not less than sixty percent."7

Against that benchmark:

spiked. It was 42.70% in 2019.8

2024.9

On the loan above, expected claims come to about $1,162 against $3,691 paid. Roughly 68 cents in every dollar does not come back as claims.10

Why nobody has told you since the day you signed

This is the part worth knowing, because it is not an accident of paperwork. It is what the rules require, and what they do not.

For a closed-end loan — a car loan, an installment loan — the disclosure happens before the loan starts and never again.11

There is exactly one section of the federal rules that requires any disclosure after a closed-end loan is made. Its full list of triggers is refinancings, assumptions, adjustable rate changes, escrow cancellation and a successor taking over. No insurance event appears on that list.12

Two details finish the job:

Renewing the cover is expressly not a refinancing, so it triggers no disclosure at all.13

A price increase after signing requires no new disclosure either.14

So the answer to "why has nobody told me" is that nobody is required to, and the rule says so in terms.

Why your credit card tells you and your car loan does not

Put the two side by side, because the contrast is the whole story.

On a credit card, a charge for this kind of cover must appear on the statement, grouped under Fees, itemized, with a total for the period and a calendar year-to-date figure.15

Twelve times a year, with a running annual total.

On a car loan, the same kind of cover is disclosed once, at signing — possibly outside the main disclosure box, possibly merged with other premiums into one line, possibly with no insurer named — and then not again for six years.16

Same product. Same purpose. One is on your statement every month with a year-to-date total. The other is principal, and principal has no name on it.

Four things the one disclosure you got may not have shown

The rules that govern that single disclosure allow all of the following, and each is in the regulation itself:16

  1. It can sit outside the main disclosure box. The requirement to group disclosures together carves this one out. It can be anywhere on the contract.
  2. Several products can be merged into one number. Credit life, credit disability and credit property can appear as a single figure labeled "insurance."
  3. The insurer need not be named. Insurance companies are one of a small number of payees that may be described in general terms.
  4. The itemized breakdown is something you have to ask for. If the box is not ticked, the breakdown is never produced.

None of that is a loophole someone found. It is the rule as written.

Where this is illegal, and where it is not

Financing a single premium for credit insurance into a home loan is prohibited by federal statute. The provision is actually captioned Single premium credit insurance prohibited, and it covers all residential mortgages rather than only high-cost ones.17

There is no federal ban on financing it into a car loan or a personal loan.18

State bans exist, and every one found applies only to loans secured by a home.18 For military borrowers it is not banned, but it counts inside the 36% rate cap.19

Read those two facts together. The practice was prohibited where the loan is largest and most scrutinized, and left in place where the loan is smaller and the borrower has fewer options.

What you can actually do

None of this is quick, and none of it is your fault for not having done it already. But each one has a definite answer.

It was never required. For the premium to sit outside the finance charge at all, the lender had to disclose in writing that the insurance is not required and get your written request for it.20 So if you were told the loan depended on it, that was not true — and that is worth knowing whether or not you can act on it now.

Find the contract, not the statement. The statement will not show it. The retail installment contract from the day you signed will. Look for "insurance," and for any figure in the amount financed that is not the price of the thing you bought.

Ask your lender two questions in writing. What is the current unearned premium on the credit insurance, and what would be refunded if it were canceled. Cancellation and refund rules vary by state and by contract, so the answer has to come from them — but the question has an answer and they have to have it.

If you refinance, check it is not added again. A new loan is a new sale, and the same products are offered at the same desk.

On a credit card, go and look now. That one is on your statement, itemized, with a year-to-date total. You can find what it has cost you this year in about a minute.15

If you are signing something soon, ask for the itemization. It is the box that does not get ticked by default, and the breakdown does not exist unless you ask for it.16

What is not known, and should not be guessed

Two things circulate as facts and are not.

How common this is on car and personal loans has never been measured. The regulators' own data collection records premiums and claims, but not whether a premium was a financed single premium or a monthly charge, and not by loan type.21

How often it is added without a borrower's knowledge has no published rate. Complaint counts exist, but a person who never noticed does not complain, so complaints cannot measure it. Any percentage quoted for this does not come from a regulator.21

Both matter here. The arithmetic above is what the product costs when it is sold. It is not a claim about how many people have it.

Where Plenee fits

A financed single premium is invisible by construction. It is principal, it has no statement line, and no rule requires anyone to mention it again — so nothing in an ordinary view of your money will ever surface it.

Plenee can hold the two facts that make it visible: what your payment would be without it, and what the contract said on the day. And on a credit card, where the charge does appear every month, it can total what the cover has cost you this year rather than leaving it as twelve separate small lines.

The short version

Credit life and credit disability sold with a car or installment loan are usually charged as a single premium added to the loan, which means you pay interest on the insurance. On an average new-car loan that is about $3,059 of premium plus $632 of interest, or 9.1% of the amount financed, for something optional. The regulators' own benchmark for reasonable value is a 60% loss ratio; credit life has cleared it once in ten years and credit disability has not reached 45% in a decade. Roughly 68 cents in every dollar does not come back as claims. You were told once, at signing, possibly outside the disclosure box and possibly merged into one line — and no rule requires anyone to tell you again. The same cover on a credit card appears on every statement with a year-to-date total. Financing it into a home loan is illegal; into a car loan it is not. It was never required, and asking your lender what the unearned premium is has a definite answer.

Also in these situations
  1. One Income, No BufferThe credit insurance added to an installment loan, and the interest you pay on it.
  2. Still StudyingWhat gets added to a first car loan, and why no statement shows it.
  3. Two Countries, One BudgetCover added to an installment agreement, priced off a thin file.
Sources
  1. NAIC Model Regulation MO-370: "Sp = Single Premium per $100 of initial consumer credit life insurance coverage." The premium is computed on the initial amount insured and added to the amount financed.
  2. CFPB consent order, OneMain Financial Holdings, 2023: the premiums and fees for the optional add-on products "are added to Customers' loans and are subject to a finance charge", and the lender "pays the credit-insurance premiums… to the products' providers but keeps the interest charged on the premiums and fees."
  3. FTC v. Associates First Capital, 2001: the complaint charged that borrowers were not told "that the entire premium for the credit insurance was financed up front and the consumer paid additional points and interest on the loan as a result." CFPB Supervisory Highlights, Fall 2024, describes the current practice: "Consumers generally finance these add-on products at loan origination, with the product premium paid upfront and then included in the amount financed."
  4. Federal Reserve statistical release G.19: average amount financed on a new car at a finance company $40,582 (2025); average 60-month new-car rate at commercial banks 7.65% (2025). G.19's average maturity is 66 months, so a 60-month term understates the premium.
  5. South Dakota Administrative Rules 20:06:06:03 and 20:06:06:04: credit life, decreasing term, single premium at $0.56 per year per $100 of initial insured indebtedness; credit disability, 58–60 month term, 14-day retroactive, at $4.21 per $100. These are prima facie rates — the presumptive ceiling most sellers charge. Filed rates vary more than three-fold across states, from about $0.241 per $100 on a 12-month basis in Texas to $0.80 in Louisiana and Mississippi.
  6. The worked example mixes one state's filed rates with national loss ratios, and the loss ratios cover the whole national credit life and credit accident-and-health books rather than car loans alone. It excludes GAP and vehicle service contracts entirely, which are different products with no comparable published data, and they must not be added to this figure.
  7. NAIC Model Regulation on consumer credit insurance: benefits are reasonable "if the premium rate charged develops or may reasonably be expected to develop a loss ratio of not less than sixty percent (60%)."
  8. NAIC Credit Insurance Experience Exhibit, countrywide, 2012–2021: credit life 64.00% (2021), 50.97% (2020), 42.70% (2019), ten-year average 47.62%; credit accident and health 26.25% (2021), 29.53% (2020), 30.62% (2019), ten-year average 33.30%. The 2012–2021 edition is the latest published.
  9. NAIC 2024 Accident and Health Policy Experience Report: group term life 62.3% in 2024. Used as the closest ordinary product to credit life.
  10. Expected claims of $1,162.48 computed as credit life $1,221.96 × 47.62% plus credit disability $1,837.30 × 31.6% — 38.0% of premium and 31.5% of the $3,691.17 total outlay once financed interest is counted. The credit disability loss ratio of 31.6% (14-day retroactive, 2018–2021) is from the Society of Actuaries Research Institute's 2023 Credit Disability Study, authored by Hause Actuarial Solutions and sponsored by the Consumer Credit Industry Association — the credit insurance industry's own trade body — with three SOA sections. It uses regulator data and its purpose is reserve validation, not consumer rate adequacy. It is the most granular public single-premium credit disability experience available, which is why it is used; the provenance belongs with the figure.
  11. 12 C.F.R. § 1026.17(b): "The creditor shall make disclosures before consummation of the transaction." Subpart C imposes no periodic statement requirement for non-mortgage closed-end credit.
  12. 12 C.F.R. § 1026.20 is the only section of Regulation Z imposing disclosures after consummation on closed-end credit. Its complete trigger list is refinancings, assumptions, adjustable rate adjustments with a payment change, the initial adjustable rate adjustment, escrow cancellation and successor-in-interest. No insurance event appears.
  13. 12 C.F.R. § 1026.20(a)(5): the following shall not be treated as a refinancing — "the renewal of optional insurance purchased by the consumer and added to an existing transaction."
  14. Official Interpretations to 12 C.F.R. § 1026.4(d)-3: "An increase in insurance rates after consummation of a closed-end credit transaction… does not require redisclosure."
  15. 12 C.F.R. § 1026.7(b)(6)(iii): charges must be "grouped together under the heading Fees, identified consistent with the feature or type, and itemized, and a total of charges, using the term Fees, must be disclosed for the statement period and calendar year to date." Voluntary credit insurance and debt cancellation charges are brought within this by § 1026.6(b)(3)(ii)(F).
  16. 12 C.F.R. § 1026.17(a)(1) requires disclosures to be grouped together and segregated, then excepts § 1026.18(n), which "may be made together with or separately from other required disclosures". Official Commentary permits several financed insurance premiums to be "combined and listed in one sum, labeled 'insurance' or similar term". § 1026.18(c)(1)(iii) permits insurance companies to "be described using generic or other general terms". § 1026.18(c)(2) makes the written itemization available on request rather than by default, a structure carried in 15 U.S.C. § 1638(a)(2)(B).
  17. 15 U.S.C. § 1639c(d), captioned "Single premium credit insurance prohibited": "No creditor may finance, directly or indirectly, in connection with any residential mortgage loan… any credit life, credit disability, credit unemployment, or credit property insurance", excepting premiums calculated and paid in full on a monthly basis. Implemented at 12 C.F.R. § 1026.36(i). This covers all residential mortgages, not only high-cost ones — citing the high-cost rule alone cites the narrower provision.
  18. No federal prohibition on financing single-premium credit insurance into an auto or personal loan was found. State prohibitions located apply to dwelling-secured loans only: North Carolina G.S. 24-10.2 (consumer home loans) and New York Banking Law 6-l (high-cost home loans). One lender, Toyota Motor Credit, was ordered to cease financing this cover from 1 January 2024.
  19. 32 C.F.R. § 232.4: any charge for single premium credit insurance counts within the 36% Military Annual Percentage Rate cap, and the bona fide fee exclusion does not reach it.
  20. 12 C.F.R. § 1026.4(d)(1): the premium is excluded from the finance charge only if the creditor discloses in writing that the insurance is not required, discloses the premium for the initial term, and the consumer "signs or initials an affirmative written request for the insurance after receiving the disclosures."
  21. The NAIC Credit Insurance Experience Exhibit collects premiums and claims by company and state, with no dimension for premium structure or loan type, so the prevalence of financed single premiums on car and personal loans has not been measured. No US regulator has published a base rate for how often this cover is added without a borrower's knowledge; complaint composition cannot measure it, since a borrower who never noticed does not complain.

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