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Credit Life Insurance
Credit life insurance is a type of insurance that is designed for repaying debts on event of the death of the insured. There are some lenders that ask for credit life insurance before they actually approve your loan. Such an insurance policy can be bought for life or for a term period.
Why Credit Life Insurance
Credit life insurance is a good option so that your debt is eliminated and doesn’t have to be paid by your family in the event of your death. The premiums for credit life insurance are usually collected on a monthly basis, and their amount depends on the balance of the loan amount. It’s not that a credit life insurance has to be a single coverage; some companies offer double coverage in them.
Credit life insurance comes in handy when you want to purchase something eagerly. For instance, the purchase of your vehicle could be made easy through your credit life insurance because it will stay protected in the untimely event of your death and your family won’t be deprived of it. The good thing about credit life insurance is that most companies don’t ask for a physical exam while you purchase this cover. Also, the occupation that you have adopted is not a hindrance and the coverage begins immediately from the point of your purchase.
Understand The Difference
The basic difference between regular life insurance and credit life insurance is that the policy beneficiary in this case is the creditor, not a family member or a friend. Apart from that, credit life insurance policies are usually term policies as compared to regular life insurance plans. Experts often recommend that as compared to credit life insurance, you can buy term life insurance, which would give you much better coverage along with leaving sufficient money to dispose of your loans.
Buying Credit Life Insurance
You can easily hunt for a good credit life insurance policy on the Internet, where you will have many free quotes and will also be saved the trouble of dealing with overzealous salespeople. Don’t simply select the first policy that is offered to you. You can negotiate terms and also shop around for a deal that gives you value for your money. There are some more important things to check before signing on the dotted line, like if the rate of premium will decrease with the decrease in the loan amount and if so, what the percentage is.
One form of credit life insurance is single premium credit life insurance. This form of insurance is often characterized negatively as it can be quite expensive. This credit life insurance works by adding the entire amount of the policy to the amount of the loan at one go.
Considerations for Credit Life Insurance
Credit insurance is often not recommended, since the legal fine print in such policies can make it difficult for people to make claims. Look for credit life insurance policies where premiums can be paid monthly as opposed to in a single lump sum. Home equity is typically the largest financial asset for most homeowners. It is reasonable to be concerned, with credit life insurance, that this equity is being stripped off and could even result in the loss of one’s home in some cases. Therefore, if you want to go in for credit life insurance, do so at your own risk. But a word of caution, be sure to read the fine print and ask about it if you can’t understand.
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