Selling Insurance Through Credit Unions: Busting the Myths Holding Back Growth
Credit unions overlook life insurance despite tight margins and slow loan growth. Integrating coverage into lending and financial planning can close protection gaps for members while generating non-interest income institutions need.
By Nicole Volpe, Contributor at The Financial Brand
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Credit unions face tightening margins and slower loan growth, making non-interest income more critical than ever. Yet many financial institutions, including credit unions, overlook life insurance — which sits squarely at the intersection of their members’ financial security and their own balance-sheet strength.
A few data points bring both the challenge and the opportunity into sharp focus:
- Annualized loan growth in the U.S. credit union system was just 1.9% in the first half of 2025 — well below historical norms and far slower than overall asset growth — but fees have not picked up the slack: Total non-interest income for federally insured credit unions was down 3.8% in the same period.
- At the same time, families’ protection needs haven’t diminished: While the number of U.S. individual life insurance policies sold grew 4% in the first half of 2025, more than 40% of Americans say they lack adequate coverage, and industry research estimates over 100 million adults face a protection gap.
- And yet — though comprehensive data on insurance sales through credit unions is hard to come by — one recent study found only 15% of financial institution customers have purchased any type of insurance product through their bank or credit union.
Persistent myths and operational blind spots help explain the gap. Many members perceive life insurance as expensive and complicated: a big solution to a problem that feels far in the future, especially as more urgent, near-term financial concerns clamor for their attention. And credit union leaders may fall prey to a similar mindset, tagging life insurance as a freestanding, narrowly-focused offering rather than recognizing it as a versatile product with relevance across an institution’s portfolio and its members’ financial journeys.
Many credit unions overlook how payment protection or loan-attached coverage can lower risk and strengthen financial health. In fact, opportunities to offer protection are already embedded in core products and services, from loans to financial planning. Proactively integrating life insurance into these touchpoints can close protection gaps for families while helping margins recover. For credit union leaders, the first step is rethinking your assumptions:
Myth: Life Insurance Is Expensive and Hard to Get
One of the most persistent barriers is the belief that life insurance is prohibitively expensive. This perception is buttressed by industry rules of thumb that suggest life insurance must account for 10 to 30 times the insured person’s annual salary. Some resources suggest calculating coverage as the sum of five to 10 years of income replacement plus outstanding debts plus future education costs for children plus “final expenses” (yikes) and emergency funds.
“People just look at that and go, well, that’s too big. It’s overwhelming,” said Joseph Boan, Senior Vice President and Head of Sales Distribution at TruStage, which provides insurance and financial services to credit unions and their members. “A better idea is to start with what the member can afford, helping the member understand that one step forward is better than doing nothing.”
The aim is to emphasize incremental progress: Help members understand they don’t need to solve every financial risk in one step, that partial coverage can still make a profound difference for families. The idea is to challenge the assumption that life insurance isn’t relevant to the member relationship or is somehow outside the credit union’s mission. A consultative, fact-based approach is key.
Myth: Life Insurance Is a Hedgehog (Not a Fox)
In the tale of the hedgehog and the fox, the hedgehog knows one big thing and focuses on doing only that; the fox knows many things and adapts. Financial institutions, including credit unions, often treat life insurance like a hedgehog — a single-purpose product meant to provide a single, comprehensive payout if the household’s primary earner dies. But life insurance is more fox than hedgehog; it can create value in multiple ways for both members and the institution.
One essential model is life insurance tied to lending — offering borrowers enough coverage to retire an auto or home loan should they die (or become unable to work) before it’s paid off. (Many credit union professionals continue to rely on a 1991 book that framed the idea in powerful and personal terms: The Debt Shall Die with the Debtor.) This approach doesn’t just help families at a moment of extreme financial stress; it also protects the credit union from potential loan default. And yet penetration rates show how unevenly this opportunity is being captured: some institutions cover a high percentage of eligible loans, others much lower, according to TruStage’s Boan.
Financial planning conversations open an even broader set of uses for life insurance. “Members are in different places in their financial journey,” Boan said. “Some are using a life event to trigger the conversation. Others are doing it as part of a full-blown financial plan. So, your approach has to be individual and apply to where they are.”
When members sit down to map long-term goals — saving for college, protecting a spouse’s income stream, paying off a mortgage, or passing wealth to heirs — coverage becomes a natural part of the conversation. Not just in the context of replacing lost income, but in relation to specific life phases and stages, such as saving for education or planning for retirement.
Some institutions go further by offering digital trust- and estate-planning tools, helping members think through legacy and inheritance while they’re still healthy and working. These planning-driven touchpoints expand life insurance well beyond a single death benefit and reposition it as a versatile tool for building financial resilience.
Beyond safeguarding the balance sheet, loan-attached and planning-based coverage can also generate non-interest income — an increasingly vital lever as loan growth lags historic norms and margins stay tight. In today’s slow-growth, margin-pressured environment, a product that protects members and bolsters revenue is too versatile to be boxed in as a one-note offering.
Myth: Life Insurance Is Operationally Complex
The final barrier is often execution. Credit union leaders worry that selling insurance will mean extensive staff training, complicated underwriting, and a handoff of their member relationships to an outside partner. Complexity fears impact members too, who don’t like the idea of intrusive health assessments, which they assume will be necessary.
When designing a life insurance strategy, “credit unions should focus on the 80% of people who need it the most,” Boan said. TruStage’s products tend not to require heavy underwriting, he said: “It’s really about what we can deliver that helps the participant and that we’re comfortable that we can get approved.”
For leaders considering how to implement, the key is to build on workflows staff already know. Coverage can be quoted and offered at the point of loan closing, for instance, with technology and training integrated directly into existing systems. Third-party providers — from insurers to digital platform partners — can supply that integration, training, and compliance support so credit unions don’t have to reinvent processes or surrender the member relationship.
Perceptions matter, but they shouldn’t dictate destiny. Long-held assumptions about life insurance — that it’s costly, hard to sell, or outside a credit union’s mission — have kept many institutions from using a tool that serves both members and the balance sheet. With credit unions averaging 0.65% return on assets in the first half of 2025, every basis point of income counts. Diversified, non-interest income is a key to sustaining performance, and building future strength. Life insurance, properly integrated into lending and planning conversations, offers exactly that: protection families need and revenue resilience institutions can’t afford to overlook.
