Are you wondering what is credit insurance? Very simply,
credit insurance is an insurance policy that protects a loan on
the chance that you are unable to make the repayments. The next
time you have occasion to apply for a loan or mortgage, you will
be asked if you want to buy credit insurance, or it might
already be included in your loan proposal. If so, it will
increase your loan amount and you'll pay additional interest.
Credit insurance usually is optional, which means you don't have
to purchase it from the lender. Before deciding to buy credit
insurance from a lender, think about your needs, your options,
and the rates you're going to pay. You may decide you don't need
credit insurance.
If you decide to get credit insurance
be aware that it can be an expensive form of insurance. For
example, it may be less expensive and more practical for you to
get life insurance than credit insurance.
Before
deciding to buy credit insurance, ask the lender the following
questions:
How much is the credit insurance premium?
Will the credit insurance premium be financed as part of the
loan?
Can you pay monthly instead of financing the
entire premium as part of your loan?
How much lower
would your monthly loan payment be without the credit insurance?
Will the insurance cover the full length of your loan and the
full loan amount?
Can you cancel the insurance? If so,
what kind of refund is available?
Prior to signing any
loan papers, ask the lender whether the loan includes any
charges for voluntary credit insurance. If you don't want credit
insurance, tell the lender. If the lender still insists that you
take out credit insurance, find another lender.
About the Author:
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the
www.directonlineloans.co.uk website.
