INSS (National Institute of Social Security) and the Federal Government of Caixa Economica have signed an undertaking to stop the sale of credit life insurance to state-owned banks for salary loans provided to retirees and pensioners.
Credit life insurance (also known as “financial protection” or “credit life insurance”) is a type of credit-linked life insurance that guarantees payment of debts in the event of death, disability, unemployment, or other circumstances specified in the policy.
Caixa, contacted after 2:47 p.m., did not respond until the publication of this report. The total amount that may be refunded or the number of customers affected was not disclosed.
Under this agreement, Caixa undertook to adjust the customer’s credit limit in honor of a factor of 1.6 times the monthly benefit amount. In addition, if this limit is exceeded, the bank must refund the wrongly charged amount.
The state-owned company must also undertake to send all contractual documents that were missing from its formal operations and must notify INSS every 60 days of the beneficiaries to whom amounts wrongly paid under the credit life insurance policy have been refunded. You also need to effectively communicate the reason for the return to your customers.
Through this agreement, Caixa also committed to a series of measures, including:
- Suspension of credit life insurance
- Commercial links prohibited. This means that customers are not obligated to purchase any type of insurance in order to obtain a loan. In addition, banks must wait for the completion of administrative procedures to investigate possible unjustified credit life insurance premiums and, if applicable, return the amounts to beneficiaries.
According to INSS, the agreement aims to protect the interests of beneficiaries and ensure full compliance with the law when contracting salary loans.
Other banks
On October 30, INSS had already signed an undertaking with Banco BMG to refund more than 7 million reais wrongly claimed to approximately 100,000 beneficiaries.
This amount will be refunded through a direct discount on the customer’s invoice. INSS said recipients will be able to see the amount on their next card bill.
A similar thing happened last Tuesday (4th) with Banco Inter, Factor Finanseira and Cobuccio Sociedade de Credito Direto, which signed commitments to immediately suspend the collection of credit life insurance.
INSS said last week that other banks are reviewing their actions, even if proceedings have not been initiated. According to the Institute, this is the case with C6 Bank, which will no longer make payments on INSS proposals in the form of so-called “welfare benefits” indefinitely. C6 reported in a statement that it is not the subject of a lawsuit. “The provision of credit life insurance to commissioned customers is prohibited by INSS Normative Directive 138 from 2022 onwards, and C6 Consig has never made an offer of this kind before or since the enactment of this regulation.”
The bank said it understands that INSS wants to review the entire implementation of additional offers related to salary loans. As a result, we have decided to suspend benefits indefinitely, including discounts at pharmacies and clinics, funeral assistance, and free access to telemedicine.
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