What is credit Insurance
It is an Insurance policy that protects the policyholder and helps pay off one’s debts in the event of unemployment, death, insolvent, or disability. It does not lend money to the policyholder; it, however, ensures that the lenders continue receiving their payments.
Types of credit insurance
There are several types of credit insurance, each carrying its benefits.
Credit disability insurance
This is known as health or accident insurance. This credit policy will pay the policyholder’s debt if the borrower falls sick, has been injured, and cannot partake in any work.
Credit involuntary unemployment insurance
Also known as involuntary loss of income insurance, it assists in paying the policyholder’s debt you have lost your job, not through your fault or have been laid off.
Credit life insurance
In the event of a policyholder’s death, it assists in settling the loans and debts left behind.
Credit property insurance
In the event of property theft, accident, or natural disaster, this policy will assist settle any loans or debts.
Credit leave of absence insurance
In the event you take a leave of absence to take care of a family member, this policy assists in paying the lender a limited number of monthly payments.
What to consider before purchasing a credit insurance
When considering purchasing a credit insurance policy, there are several things to look out for.
What does and doesn’t the credit insurance policy cover?
What are the types of credit insurance policies? What do they cover?
Which types of credit insurance are better than the other?
Will credit insurance cover the full-term loan?
Can the insurance or the lender cancel the insurance policy?
Without consent, can the policy premiums and terms be changed?
What is the waiting period for the payment of the monthly benefits?
What are the restrictions for each credit insurance policy?
Will there be a refund after the policyholder cancels the insurance?
Can the insurance be financed as part of the loan?
It is not compulsory to get credit insurance; it is optional. It is an expensive affair, for it can make the loan less affordable, add extra costs to the loan, thus putting the borrower at a greater risk of default.