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Credit Life Insurance
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Credit Life Insurance
Credit insurance is a controversial form of insurance that you purchase when you take out a loan. If you die, are disabled, or lose your job, your credit insurance policy makes payments on your debt until the loan is paid off or the policy ends. Credit insurance is linked with a specific loan and the cost of the policy is typically folded into your loan payments.
Although the various forms of credit insurance are big business, they are frequently criticized for being too expensive and too restrictive. Anyone thinking about getting credit insurance should compare credit insurance to other forms of life insurance, such as term life insurance, which can provide better coverage at a much cheaper premium.
The Types of Credit Insurance
Credit life insurance covers policyholders in the events of death, while credit disability insurance provides coverage for disabilities. Generally, you have to remain disabled for a certain number of days before the policy begins making payments, and when it does, those payments are either retroactive to the date of your disability or kick in after a waiting period of 14-30 days, depending on the terms of the policy.
Credit unemployment insurance makes your minimum monthly loan payments if you lose your job through a layoff or involuntary unemployment. Like credit disability insurance, you have to remain unemployed for a specific period of time and the benefit is either retroactive or kicks in after a waiting period.
Another type of policy, credit property insurance, is written for a purchase in which the collateral is not a motor vehicle, mobile home, or real estate. The policy pays to repair or replace a purchased item if it is lost, damaged, or stolen. |
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