Articles on Credit Insurance: CLICK HERE
One very big misconception is that Credit Insurance is mandatory.
In fact the FTC( Federal Trade Commission),the nation’s consumer protection agency says it is against the law for lenders to include credit insurance or any other optional products in your loan without you knowing about it. Or without your permission.
What credit Insurance does is it protects the loan company in the event you don’t pay your loan. That is why they are so convincing about why you should purchase it.
There are four different types of Credit Insurance:
1. Credit Life insurance, this pays off all or some of your loan if you were to die.
2. Credit Disability Insurance, this can also be known as accident and health insurance, makes payments on your loan if you become ill or are injured and can’t work to pay the loan.
3. Involuntary Unemployment Insurance, also known as involuntary loss of income makes the payments on your loan if you lose your job due to no fault of your own., such as a layoff..
4. Credit Property Insurance. This protects personal property used to secure the loan if it is destroyed by events like theft, accident or natural disaster.
Before you decide to buy any Credit Insurance think about do you really need it or not. You want to know what options you have and what exactly you will be paying. If you do choose credit insurance do keep in mind that it can be very expensive and you may want to explore other options. In some cases it may be cheaper to choose a life insurance policy to cover the loan. .Before you decide to sign up for any credit insurance you should find out exactly how much the premium will be.
You want to know if it will be financed as part of your loan. Check to see if you can pay it monthly instead of financing the entire premium. A very important thing to establish is how much would your monthly payment be without the Credit Insurance. Establish the time frame the loan will cover the whole loan or just part of the loan. You really want to know what the limits and what is not included in payments of benefits. Inquire if the benefits begin immediately or is there a waiting period. Lastly, can you cancel the the insurance, and if you do will you receive a refund.
So if you are making a purchase or taking out a loan and you are asked to take out Credit Insurance or you will not be given the loan, you may want to consider going elsewhere. You never want to feel pressure from a lender. Before signing on the dotted line you want to make sure you are not paying for any so called extras that you do not want.
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