Optional Protection Plans: Credit Union vs. Dealership

Optional Protection Plans

A n optional protection plan is exactly what it sounds like: a plan purchased through a dealer or financial institution that protects your assets including loans, debts, and your earning ability.
Here’s what you need to know about the protection plans available at Education First FCU.

What is GAP Insurance?

GAP (Guaranteed Asset Protection) insurance is an insurance add-on that pays the difference between the depreciated value you still owe on your vehicle if it’s stolen or totaled. In plain English, it covers that “gap” between your car’s real value (as determined by your insurance company) and your auto loan balance.
At Education First, GAP Advantage will provide you with up to $500 toward your insurance deductible, and $1,000 toward financing a replacement vehicle.

How much does GAP insurance cost?

GAP insurance generally costs between $500 and $700 when purchased from a dealership, or between $20-$40 a year when added to an existing auto insurance policy. However, GAP insurance purchased through Education First will cost you just $400 per year.

Does GAP benefit everyone? 

GAP insurance is recommended for drivers who are, or likely to be, upside down on their auto loans. No, this doesn’t involve a trapeze; it just means the drivers owe more for their car than what it is actually worth.

What is Mechanical Breakdown Protection (MBP). 

Mechanical Breakdown Protection is an extended warranty that covers the cost of major repairs.  It may include rental reimbursement, Emergency Roadside Assistance and even Battery Replacement as additional perks.  

MBP, when purchased at a dealer, costs, on average, $100 a year. There’s also that deductible, averaging at $250-$500 a year for other providers.  But at Education First,  all plans have a $0 deductible, include rental car reimbursement, and offer Emergency Roadside Assistance* and Battery Repair or Replacement*.

Who Benefits from Mechanical Breakdown Protection? 

MBP is especially recommended for drivers who are financing a new vehicle, as the repairs on these vehicles can be quite costly.

What is Credit Life/Credit Disability Insurance

Credit life insurance pays off a borrower's outstanding debts if the borrower dies. The face value of the policy decreases along with the outstanding loan amount as it is paid off over time.  Credit Disability insurance pays a portion of the policyholder’s salary if they are unable to work due to a disability.

How much does Credit Life or Credit Disability insurance cost?

Premiums for credit life insurance or credit disability policies are a tad more complex as they are often rolled into the payments of the connected loan and priced per-one-thousand-dollar owed. While a Credit Life policy at a dealership can run as much as $0.50 for every $100.00 financed, Education First offers coverage for a single borrower starting at $0.66 for every $1,000.00 finance, or $0.99 for joint-borrowers.  Credit Disability insurance is can run anywhere between 1-3% of  your income. Premiums for this type of coverage tend to be higher because, statistically, the likelihood of becoming disabled is higher than the likelihood of death.

Do I need Credit Life insurance?  What about Credit Disability insurance?

Credit Life and Credit Disability insurance makes the most sense for borrowers whose loans have been cosigned by a relative.  No one thinks it will happen to them, but more than one in every four 20-year-olds will experience a 90-day disability before they turn 67.  The right plan will ensure you're covered in the event that the unthinkable happens to you.

To learn more, contact us today and our knowledgeable service represenatives will be happy to talk with you about your options and help you with the right plan(s) for you.

*Benefits vary by plan, please give us a call at 409.898.3770 to discuss coverage and benefit options.