6.2.10 Credit or debt insurance
- 6.2.1 Life insurance
- 6.2.2 When to review your life insurance
- 6.2.3 How much life insurance you need
- 6.2.4 Health insurance
- 6.2.5 Property insurance
- 6.2.6 Compensation
- 6.2.7 Insurable and uninsurable perils
- 6.2.8 Vehicle insurance
- 6.2.9 Business insurance
- 6.2.10 Credit or debt insurance
- 6.2.11 Identify your insurance needs
- 6.2.12 Summary of key messages
There are insurance products available to protect you if you cannot pay your debts because of illness, accident or death.
Type of insurance
How it works
Mortgage disability insurance
makes mortgage payments to your lender(s) for a specified time if you cannot work due to a severe injury or illness.
Mortgage default insurance
protects the mortgage lender if you cannot make your mortgage payments. It is required by law if your down payment is less than 20 percent of the purchase price of the home.
Mortgage life insurance
pays the remaining balance on your mortgage to the lender in the event of your death.
Credit protection insurance
makes the minimum monthly payments on a credit card, loan, line of credit or other debt for a specified time if you cannot work due to severe injury or illness. You are responsible for paying the balance when you recover or after the coverage period ends (and for any new charges).
Credit balance insurance
pays the remaining credit card balance, bank, line of credit or other debt in full, to the lender at the time of your death.
Identity theft insurance
helps you recover lost wages, restore your credit and reclaim your identity in the event of identity theft. It does not reimburse you for money that has been stolen from you.
Be aware that all of these types of insurance may be subject to limitations and exclusions. For example, mortgage life insurance and credit balance insurance are life insurance products, so they may require a medical exam before approving you for a policy, just like other life insurance products. Read your policy carefully and make sure you understand what is covered.
Consumer credit and debt insurance is usually quite expensive, so make sure you really need it. Discuss your options with an insurance agent.
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