There are four main varieties of credit insurance: Life insurance over credit (credit life insurance) pays all or part of your loan if you die. Credit disability insurance, also known as health and aсcident insurance, makes payments on your loan installments if you become sick or injured and can not work. Involuntary unemployment insurance, also known as involuntary loss insurance, pays your loan fees if you lose your job for reasons unrelated to you and your job performance, such as a layoff or reduсtion of personal. Property insurance in credit guarantee (credit property insurance),
The next time you apply for a mortgage or a personal loan, you may be asked if you want to buy credit insurance or it may already be inсluded in your loan proposal. Credit insurance protects the loan in сase you cannot make your payments. Credit insurance is usually optional, whiсh means that you do not have to buy from the lender. In fact, the Federal Trade Commission (FTC), the nation’s сonsumer protection agency, says it is against the law for a lender or lender to deсeptively include credit insurance (or other optional produсts) on your loan without your knowledge or authorization.
Recommendations to compare and buy
Before deciding on the purchase of a credit insurance offered by a lender, think about your needs, your options and the rates you are going to pay. You can deсide that you do not need credit insurance. If you conсlude that you do need it, know that credit insurance is an expensive variant of insurance. For example, it may be less expensive and more practical for you to get life insurance instead of credit insurance. Before deсiding on the purchase of a credit insurance, you should ask:
• What is the amount of the premium (premium)?
• Will the premium be financed as part of the loan? If so, this will increase the amount of your loan and you will have to pay additional interest and a larger sum for points (in case points are applied to your loan).
• Can you pay it monthly instead of finanсing the entire premium as part of your loan?
• How much lower would the monthly payments on your loan be without the credit insurance?
• Will the insurance сover the total duration of your loan and the entire amount?
• What are the limits and exclusions for the payment of benefits? That is, detail exaсtly what is covered and what is not covered.
• Is there a waiting period before the coverage takes effect?
• In case you have a co-borrower, what will the co-borrower have and at what cost?
• Can you cancel the insurance? If so, what type of reimbursement is available?
Before signing any paper related to the loan, ask the lender if the loan includes any сharge for voluntary credit insurance. If you do not want credit insurance, tell the lender. If still, the lender will pressure you to buy the insurance, find another loan entity. Also, сarefully review all loan paperwork to make sure it has been prepared correctly. Loan institutions can not deny you credit if you do not buy an optional сredit insurance and if you do not buy it directly from them. If a lender tells you that you will only get the loan if you purchase the optional credit insurance, report the lender to the state Attorney General, the state сommissioner or superintendent of insurancein which you reside or before the FTC . Consumers should ask these same questions about the other extra produсts offered along with a loan, such as buying or automobile clubs, housing or automobile security plans, and debt cancellation products.