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American Bankers Association CRCM Exam - Topic 2 Question 120 Discussion

State National Bank offers credit life and disability insurance on all consumer loans. This credit-related insurance is sold by a third party, but the bank collects a commission on all sales. The bank also sells hazard insurance through its affiliated insurance agency. Which of the following actions is legal for State National?
C) Require all borrowers with real property loans to provide insurance to protect the collateral
A) Require all consumers to purchase credit life insurance through the bank
B) Require only certain consumers to purchase credit life insurance through the bank
D) Require borrowers on real estate loans over $50,000 to purchase hazard insurance through the bank

American Bankers Association CRCM Exam - Topic 2 Question 120 Discussion

Actual exam question for American Bankers Association's CRCM exam
Question #: 120
Topic #: 2
[All CRCM Questions]

State National Bank offers credit life and disability insurance on all consumer loans. This credit-related insurance is sold by a third party, but the bank collects a commission on all sales. The bank also sells hazard insurance through its affiliated insurance agency. Which of the following actions is legal for State National?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Ezekiel at Jan 05, 2026, 05:16 AM

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Veta
2 months ago
Exactly! C is legal, but D could be tricky with the amount.
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Renea
2 months ago
A and B feel wrong. Can't force insurance on everyone.
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Hayley
3 months ago
I agree, but D seems reasonable too. Hazard insurance is important.
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Xuan
3 months ago
I think option C is the best choice. Protecting collateral makes sense.
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Donte
3 months ago
B) seems a bit iffy too. Why only certain consumers?
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Lashaunda
3 months ago
D) sounds sketchy. They shouldn't force borrowers to use their bank for hazard insurance.
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Ines
3 months ago
Wait, can they really require insurance for all real estate loans?
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Lelia
3 months ago
I think C) is legal. Protecting collateral makes sense.
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Verona
4 months ago
A) is definitely illegal. Can't force everyone to buy insurance.
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Aleta
4 months ago
Wait, they can't just make everyone buy insurance, that's like a scam or something. What is this, the mafia?
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Victor
4 months ago
B) Hmm, I don't know about that. Picking and choosing who has to buy it? Sounds a bit sketchy.
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Marylin
5 months ago
A) Nah, that's too much. Forcing everyone to buy insurance? That's just shady.
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Lynna
5 months ago
D) Definitely the way to go. Gotta make sure those big loans are covered, you know?
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Dominque
5 months ago
C) Seems like the most reasonable option to me. Gotta protect that collateral, am I right?
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Andree
5 months ago
D feels tricky; I think there are regulations about requiring hazard insurance, but I can't recall the specifics.
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Rodolfo
5 months ago
C sounds legal since it's common for lenders to require insurance to protect their collateral, right?
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Venita
5 months ago
I’m not sure about B, but it seems like requiring only certain consumers could be a gray area.
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Jerry
6 months ago
I think I remember that banks can’t force all consumers to buy credit life insurance, so A might be illegal.
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Millie
6 months ago
This looks straightforward to me. The bank can require borrowers to have insurance to protect the collateral, but they can't force everyone to buy it from their own agency. I'll select the answer that aligns with that.
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Amber
6 months ago
I'm a little confused by all the different insurance requirements in this question. I'll need to review the material on credit-related insurance policies and regulations before I can feel confident answering this.
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Torie
6 months ago
Okay, let me see. The bank can't force everyone to buy credit life insurance through them, but they can require it for certain types of loans. And they can definitely require borrowers to have hazard insurance, but they can't force them to buy it from the bank's agency. I think I've got the right approach here.
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Ilona
6 months ago
Hmm, this is a tricky one. I'm not totally sure about the rules around credit life insurance and whether the bank can require it. I'll have to think this through carefully.
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Glenna
7 months ago
I think I know the answer to this one. The bank can require borrowers to have insurance to protect the collateral, but they can't force them to buy it through the bank's own insurance agency.
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Shawna
10 days ago
Right, it’s all about protecting the asset, not forcing a sale.
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Jacqueline
16 days ago
Exactly! But not through their own agency.
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Dominga
2 months ago
I agree, they can require insurance for collateral.
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