Have you ever wondered what happens after you die? Your debt certainly doesn’t vanish; that’s for sure!
This is why anyone with two braincells to rub together makes the Mother Financial decision to get life insurance, which their beneficiaries can use to pay off any debt left behind by the dearly deceased. But what if you are unable to make repayments on a loan while you’re still alive? For instance, maybe you just got retrenched. Does suddenly becoming unemployed mean you also have to end up on someone’s blacklist? This is where credit life insurance comes into play. With this cover, whether in the event of your death, disability, terminal illness, unemployment, or other insurable risk, you still have the means to pay off any debt still in your name. What’s more is that that this insurance cover product is specifically dedicated to covering your debt, while the spending of a traditional life insurance pay-out is left up to your beneficiaries, who may have other ideas for your cash.
How Credit Life Insurance Works
You may have heard of credit life insurance in the context of taking out a home loan. This type of insurance often offered by banks in connection with most lines of credit. It’s much like your typical life insurance policy, except that this one is intended specifically to pay off your outstanding debt in the event that you pass away before you see the day of making that final repayment. Some credit life insurance policies extend to covering repayment in the event of your becoming unemployed, disabled, or in some other situation, which prevents you from being able to pony up the cash in time.
Key Benefits Of Credit Life Insurance
- Protect your joint borrower
If you took out a loan with your spouse or partner, this form of cover can help you protect your spouse or joint-loan signee from having to handle the remaining debt on their own. Should you meet an untimely end before paying off your debt, your partner can use the value of the policy to lessen the burden of having to pay off your joint debt.
- No medical tests required
While your typical life insurance application requires a series of stringent medical tests and health screenings, you don’t have to bring any medical screenings to the table when applying for credit life insurance.
Unlike your regular life insurance, this kind of insurance is not a prerequisite for your application for credit. When applying for a car or home loan, for instance, a bank will expect you to take out a life insurance policy just in case you don’t live to see your final installment paid. However, this is not the case with credit life insurance. Credit life insurance is a unique, fail-proof way to stay consistent with your loan repayments. Unlike regular life insurance, which only pays out after your death, this kind of life insurance provides a contingency plan in the event of everything that can go wrong while you’re still alive.
To recap, credit life insurance is tailored to pay off any outstanding debts in the event that the borrower passes away, becomes unemployed or disabled, or for any other reason that they are unable to repay the loan for any reason. These life insurance policies feature a term that corresponds with the loan maturity as well as decreasing death benefits that correspond with the reduced debt outstanding over time. Due to their specific nature, credit life insurance policies usually have less strict underwriting requirements. So, make the Mother Financial decision and cover all your bases when taking out a loan.