What is Credit Life Insurance?
Credit life insurance is a policy usually bought by a mortgagor, the person who owes the money, so that the property is protected in the event of the mortgagor’s death. The credit life insurance policy will pay the outstanding balance of the loan in such a case. Though there is an additional expense involved, many of those taking a mortgage believe credit life insurance to be a good investment for the protection of the rest of the family. If the major income producer dies, this would allow the mortgage to be paid off and the family would be able to keep the home. A credit life insurance policy pays off the remaining balance of the mortgage, thus saving any threat of foreclosure. Some states may put a limit on how much of a balance can be protected through credit life insurance but generally this is an amount higher than the average home value in the state, which means most borrowers would be fully protected, should a claim ever be filed. Borrowers may find credit life insurance an attr
Credit life insurance is a type of life insurance that pays off the balance of the loan if you should die before the loan is fully repaid. This optional coverage is available to purchase at the time you complete the financing arrengements for your boat. When purchased, the cost of the policy is typically added to the principal amount of the loan. Your dealer will provide you information about the terms and costs of obtaining the insurance as it may affect the terms of the loan. Some policies combine Credit Life insurance and Credit Disability insurance into one policy.
A type of life insurance that helps repay a loan if you should die before the loan is fully repaid. This is optional coverage. When purchased, the cost of the policy is often added to the principal amount of the loan. Lenders must disclose the terms and costs of obtaining the insurance since it can affect the terms of the loan. Some policies combine Credit Life and Credit Disability into one policy and may contain provisions for cancellation of the policy.
: Credit life insurance covers the outstanding balance of your mortgage or loan. The coverage provides money to help your family or farm business repay the loan in case of your unexpected death. It also gives them time to deal with their loss and temporarily relieves them of major financial stresses. Q: How much life insurance do I need? A: Most people should carry enough insurance to cover all outstanding debt. Two other areas to consider after debt coverage include income replacement and dependent coverage. A common estimate is five times your annual income. Q: Who may participate in the insurance program? A: All Farm Credit customers under age 70 may apply, including your spouse and partners. Q: Can I insure just a portion of my loan? A: It’s important to protect your entire debt, but you decide the percentage of your loan that you want to insure. Q: After my loan is paid off or refinanced, what happens to this insurance? A: Once the loan is paid in full or refinanced, you can keep
Credit life insurance pays off a specific debt or loan if you are disabled. It is often very expensive in terms of its annual cost for a similar level of coverage under a term life insurance policy. Some companies also offer credit disability insurance, which would cover debt payments when you are disabled. It, too, is often a very costly type of coverage compared with similar coverage under a regular disability policy. Brenda Procter, M.S., Consumer and Family Economics, College of Human Environmental Sciences, University of Missouri-Columbia If you’d like to learn more about this and other personal finance topics, the University of Missouri offers ‘Personal & Family Finance,’ a correspondence course, through the Center for Distance and Independent Study (800-609-3727). Information about this course is available at http://cdis.missouri.edu/CourseInfo/DetailCourseInfo.asp?1985. Can’t Find Your Question Here? Try Searching Our Quick Answer Knowledge Base Last update: Tuesday, July 22, 2
