What Is Credit Life Insurance

Credit life insurance is coverage that is a little different from the typical life insurance policy. This is coverage that is purchased by a consumer whenever a big item is purchased, such as a car or a home. These purchases involve a loan, and the amount is normally significant. When you make a big ticket purchase, credit life insurance will pay off any remaining loan balance on the purchase when you pass away. The policy amount that you have will be the same amount as the loan balance that is owed at any time. If you pass away before the loan is paid off then the life insurance company will pay off the balance due on the date of your death. Most of these policies also include disability options, so that if you were to become disabled and unable to work the loan balance would also be paid off by the policy. This is one of the best ways to provide financial protection with large and expensive items, while ensuring that if you become disabled or pass away the purchase will not cause any financial hardships.

One unusual factor about credit life insurance is that you normally do not choose the beneficiaries, and your family and loved ones will not receive the benefit payment, although they will directly benefit from the claim payment. If you become disabled or die, the life insurance company will pay the claim amount to the mortgage or loan holder, so that the debt is paid in full and your heirs owe nothing on the amount due. As the loan balance goes down, so does the amount of coverage. The premiums charged may be as little as a couple of pennies a day, but there are some restrictions on these policy types. You must be below the minimum age limit for this policy type, and that can vary depending on the life insurance company chosen. For many companies this age is seventy years old, but this can vary widely. Another factor is that you must be working full time, and have a gainful occupation. One restriction is that most life insurance companies will only offer credit life insurance if there is a single individual as the loan applicant. With more than one person listed it may not be possible to get this type of insurance from many companies.

Credit life insurance has many benefits. If you become disabled, your credit rating is protected because the insurance coverage takes over the payment of the balance due. These policies can be very beneficial if you have a mortgage, an automobile loan, or even college loans that are not paid off. Any large purchase or loans taken out should include credit life insurance so that you do not leave your loved ones and your estate deep in debt. You will get the peace of mind that you want, and your loved ones will be left with all of your assets and none of your large debts. It is very low cost, but the financial protection credit life offers is large.