If you own a credit card you have probably asked the company if you would like to add credit insurance. Most are not familiar with this type of insurance and either reject it or automatically accept it without knowing if it is the right type of insurance for their needs. As with all insurance policies, necessity of determination differs from person to person because of our different lifestyle and obligations. Credit insurance can be beneficial to some, but only an unnecessary cost to others depending on your situation. what to know about credit insurance and the different types can help you make an informed decision.
Credit insurance can take a variety of forms. The four main types are life, disability, unemployment and property loans:
- Credit Life Insurance pays the debts you owe when you die. The beneficiary of the policy has been the company that owes the debt.
- Credit Disability Insurance protects your credit rating by making your minimum monthly payment if you are medically disabled. There is usually a fixed period of time that payments are made after the disability and purchases are not counted.
- Involuntary unemployment credit insurance will cover your minimum monthly payment if you are laid off or reduced, and again purchases after involuntary unemployment would not be covered.
- Credit property insurance usually completely cancel out debts on items you bought with the loan if the items listed in the policy are completely destroyed by specific incidents and a deductible would not apply to pay for the damage.
Know How The Credit Insurance Marketed
Now that you know a little more about credit insurance, it is important to understand how it is marketed or sold to consumers. Usually, companies will ask you to buy it when you sign up for the loan or in a later telemarketing prompt. If the credit insurance is purchased, it will be offered free of charge for a certain period of time and sometimes the company will give you a check on your bank account as an incentive to cash in trying out the credit insurance. By cashing the check you enroll in the program.
Unlike many insurance companies, credit insurance can start with a verbal “yes” and does not necessarily require a signature, so make sure that you pay attention to what you are voting for or filling out on your loan application.
Decide if credit insurance is for you
Taking your current and future financial needs into consideration is the first step in determining if you could benefit from credit insurance. If you already have essential life and disability insurance, you may have sufficient coverage in this policy to cover your credit accounts due to your death or disability. But on the other hand, if you don’t have any kind of life and disability policies that don’t necessarily mean credit insurance is the best choice for you.
Credit insurance cannot be as inexpensive and is certainly not as flexible as traditional life and disability policies. For example, if you have a lot of credit cards you would have to take out a policy on each of these accounts. With all of these monthly policies, you can acquire a traditional life, and / or get disability policies for less and more reach, not to mention after your balance is paid with a traditional policy your loved ones would receive the balance. And, as already mentioned, with a disability and unemployment insurance only the minimum payment is covered and only for a certain amount of time. It is possible that after interest is made from minimal payments,
Find out about the credit insurance policies you are offered
If you decide that credit insurance is for you, it is important to know about the policy you are getting. You want to ask about what is excluded in politics. And keep in mind that when you buy credit insurance that includes all four types of credit insurance (life, disability, unemployment, and real estate), make sure that you don’t pay for something that you don’t need. For example, if you are not used at the time of receiving unemployment insurance you will pay for coverage that you do not use. Another example would be with credit life insurance. Some guidelines have age restrictions and the credit insurance sales reps often don’t ask your age, but simply sign up for the insurance. Make sure,
Find out if you can easily cancel credit insurance
As mentioned earlier, most credit insurance is initially free on a trial basis. After the free trial is up to you to decide if you want to keep the policy or not. Unfortunately, after the free trial period, it can be difficult to cancel credit insurance. In some cases, it is difficult to delete the correct phone number, to find the policy. Contacting the credit card company cannot be helpful, either because they cannot be sure which insurance you have offered the credit insurance.
If you do decide to buy credit insurance, make sure when you buy it all the information you would need to cancel it and keep that information in a safe place to be stored with related credit card information.