Interesting point: Credit insurance

File folder with insurance tab

Credit insurance is issued for a specific loan or line of credit that pays some or all of what is owed if the borrower is unable to pay due to unemployment, disability or death.

Premiums are often added to your monthly payments and they can be expensive, almost doubling the amount you owe in extreme cases.

Credit insurance is controversial because it is almost always cheaper to buy term life insurance or disability insurance to cover the credit balance.

The major advantage to credit insurance is that borrowers automatically qualify, even if their health makes it difficult to obtain other types of life or disability insurance.

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