Credit life insurance is a type of life insurance policy designed to pay off a borrower’s outstanding debts if the policyholder dies. It’s typically used to ensure you can paydown a large loan like a mortgage or car loan.
The face value of a life insurance policy decreases proportionately with the outstanding loan amount as the loan is paid off over time until there is no remaining loan balance. 카지노사이트
How Credit Life Insurance Works
The policy pays off the loan in the event the borrower dies.
Such policies are worth considering if you have a co-signer on the loan or you have dependents who rely on the underlying asset, such your home. If you have a co-signer on your mortgage, life insurance would protect them from having to make loan payments after your death.
The exceptions are the few states that recognize community property, but even then only a spouse could be liable for your debts—not your children.
When banks loan money, part of the risk they accept is that the borrower might die before the loan is repaid. Life insurance protects the lender and, by default, also helps ensure your heirs will receive your assets.
Credit Life Insurance Alternatives
If your goal is to protect your beneficiaries from being responsible for paying off your debts after you die, conventional term life insurance may make the most sense. With term life insurance, the benefit will be paid to your beneficiary instead of the lender.
Then, your beneficiary can use some or all of the proceeds to pay off debt as they need. Term coverage from a life insurance company is usually more affordable than credit life insurance for the same coverage amount. 안전한카지노사이트
Moreover, credit life insurance drops in value over the course of the policy, since it only covers the outstanding balance on the loan. In contrast, the value of a term life insurance policy stays the same.
Advantages to Credit Life Insurance
One advantage of a life insurance policy over a term life insurance policy. That’s a credit insurance policy often has less stringent health screening requirements. In many cases, Life insurance is a guaranteed issue life insurance policy that does not require a medical exam at all.
By contrast, term life insurance is typically contingent on a medical exam. Even if you’re in good health, the premium price on term insurance will be higher if you purchase it when you are older.
Credit life insurance will always be voluntary. It is against the law for lenders to require credit life insurance for a loan. And they may not base their lending decisions on whether or not you accept credit life insurance.
Ask your lender about the role of life insurance on any major loan you have.
Who is the beneficiary of a credit life policy?
The beneficiary of a credit life insurance policy. The lender that provided the funds for the debt being insured. The lender is the sole beneficiary, so your heirs will not receive a benefit from this type of policy.
What is the aim of credit life insurance?
Life insurance can protect a co-signer on the loan from having to repay the debt. 카지노사이트 추천
The Bottom Line
Life insurance pays off a borrower’s debts if the borrower dies. You can generally purchase it from a bank at a mortgage closing. When you take out a line of credit, or when you get a car loan.
This type of insurance is especially important if your spouse or someone else is a co-signer on the loan because you can protect them from having to repay the debt. Consider consulting a financial professional to review your insurance options and to help you determine if credit insurance is right for your situation.