Credit Insurance

Credit insurance is available in several types of coverage: credit life, disability, involuntary unemployment, and property insurance. Many times this coverage is offered as a package rather than individually. Credit insurances are made available to a borrower who has signed a loan or other offer and is concerned about the repayment of the debt if they die, become disabled or the property becomes damaged in some way. This type of policy is an excellent, inexpensive way to assure the debt will be repaid if the borrower experiences some financial setback due to physical or uncontrollable circumstances.

For repayment or monthly premium purposes credit insurances are included in the monthly repayment of the loan or minimum due amount. This credit insurance policy will not allow any named beneficiary other than the lender - not a spouse or a child or any other person. The policy is in fact the lenders' assurance of repayment. A policy for disability is coverage that will have the insurance company paying the monthly payment while the borrower is disabled or unemployed. Many financial institutions offer these types of credit insurances under the name "credit protection plan." With monthly payments made by the insurance company, the borrower has time to get back on their feet or back to work so they can begin repayment again.

Credit insurance policies will cover the repayment of debts if a borrower dies or becomes unable to repay. The debt of sin has similar coverage through Jesus Christ who died as the payment for our sinful debt. "God commendeth His love toward us, in that, while we were yet sinners, Christ died for us. ...being now justified by His blood, we shall be saved from wrath through Him." (Romans 5:8-9). The debt of sin is covered through the one who shed his blood as payment for sins and it is paid in full forever.

Property coverage for credit insurance covers disasters that destroy the property purchased. Disasters such as flood, fire, earthquake, theft and accident will relieve the borrower of paying for property that no longer exists. Deductibles are not used in policies on property. The borrower should read and understand the policy purchased to know how the coverage works when circumstances arise. Credit insurances that are purchased specifically to repay loans in the event of unforeseen circumstances are outside the control of the borrower. A life or disability policy has similar purposes, but not usually for unsecured debt and purchases made through charge accounts.

Add to: File Insurance Business article Teen Photo Images