What is Credit InsuranceThere seems to be insurance available for everything.

You can get insurance for your autos, home, jewelry, silverware, art deco, skidoo, boat and your life.   You can get insurance for flooding disability, traveling and your pet bird.   You can even get credit insurance.   Credit insurance is different from credit scores and credit ratings.

If you’re not exactly sure what credit insurance is, don’t be alarmed, not too many other people know what this kind of insurance is either.   Let’s talk about that.

The Basics About Credit Insurance:

Understanding Credit insurance:

  • When you take out a car loan or mortgage and you think you will have a hard time making payments on that loan at any time during the life of the loan, you would look into credit insurance.
  • Credit insurance pays for loans when the person who took the loan out is unable to.
  • There are different types of credit insurance.
  • You can get credit insurance to cover your loan payments if you become ill or are injured from an accident.
  • You can get credit insurance to pay off the loan if you die before it is paid off; so that your heirs are not saddled with those payments.
  • Another type of credit insurance will make your loan payments if you lose your job and are able to make the payments yourself.
  • With credit insurance you avoid the risk of losing your property if you cannot make your loan payments.
  • Your home and your automobile are two of your most valuable assets – if you have a loan on them and do not have credit insurance you run the risk of losing them.
  • Credit insurance is optional when you apply for a loan.
  • The lender must ask you if you want it included in your loan.
  • The lender cannot make you purchase credit insurance without your permission.
  • The lender cannot slip it into your loan without your approval.
  • It is against the law to make credit insurance mandatory on a loan.
  • It is also against the law to include credit insurance in a loan without your knowledge and consent.
  • When applying for a loan, ask the lender to run a quote on your loan payment amount with and without credit insurance included.
  • These quotes will give you a choice.
  • Ask the lender at the time of the loan application whether the credit insurance will cover your full loan or just a portion of the loan.
  • Some lenders just offer partial loans, so be sure to ask.
  • Ask the lender if you can cancel the insurance at any time; and if you do cancel, what are their refund policies.
Credit insurance can be of great value to you.   It’s the type of insurance you may not think you need, but when you cannot make your loan payments, you’re glad you have it.   Work with your lenders to learn as much as you can before you buy it.