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Credit Disability Insurance

Almost everyone nowadays has some kind of credit card, home mortgage, or installment loan of some sort. Credit disability insurance is a form of insurance policy that one can buy to cover loan or credit card payments if the borrower becomes disabled or too sick to work for an extended period of time. This kind of insurance is not the same as credit life insurance, which would cover the loan balance if the insured were to die. Credit disability insurance policies typically begin making the loan payments when the insurance holder has been sick or unable to work for 30 days or more. This is a good insurance policy to have if you have any kind of installment loan or credit card debt. The best feature about this kind of insurance is that insured does not have to be permanently disabled before credit disability insurance policies begin to start making the payments.

Credit disability insurance coverage will only make the minimum monthly payments until the person recovers and is able to resume working. It does not pay the entire loan balance. It will only pay the entire balance if the person is declared totally disabled for the remainder of the life of the loan. Credit disability insurance is popular with consumers and is typically purchased for different kinds of installment loans, such as for home mortgages and car loans. These policies can also cover revolving lines of credit like for home equity loans and credit card balances.

Credit disability insurance can help protect your family from financial distress when the unexpected happens. Your family will not have to shoulder the burden of making your credit card or installment loan payments for you while you are sick or injured and become disabled. Many people feel that you should be prepared for the unexpected things that can happen in life that can affect your ability to continue paying off your debt. One way to get peace of mind is by having credit disability insurance to take the worry off of unwanted and unexpected injuries or illnesses that can happen to anyone. Adding this kind of insurance policy is completely optional and it is not a requirement to get approved for loans or credit.

When shopping for credit disability insurance make that sure you understand the policy before you buy it. There are different policies. Some will only make the payments for 12 to 24 months so be sure you know what kind of policy you are buying and exactly what it covers and for how long. The better credit disability insurance policies will be more expensive to purchase, but they tend to offer fuller protection than the cheaper policies. The premiums for this kind of insurance can vary depending on the size of and length of the loan. Most policies have a 7 day to 14 day waiting period after which your loan payments can begin on your behalf until you go back to work or the loan is paid off. Most policies do not require you to be hospitalized first either. All it takes is to be under a doctor’s care. Your doctor will be required to fill out paperwork before your eligibility for loan payments will begin.

You should only purchase enough credit disability that you need to cover your debt. Anytime you take out an installment loan or revolving credit you should carefully evaluate your financial situations and determine if you are in the position of needing credit disability insurance. Most borrowers will benefit from such insurance policies. Keep in mind that the face amount typically decreases as the outstanding balance is paid down and so will the cost of credit disability insurance payments. However, the rate for each dollar amount for your outstanding balance will stay the same.

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