Credit Insurance

1. Credit life insurance- This type of credit insurance pays off all the loans in case of unfortunate death of the policyholder.
2. Credit disability insurance- This type of credit insurance policy is also known as Credit accident and health insurance. The policy pays certain amount of monthly payments for a particular loan in case the policyholder falls ill or gets injured.
3. Credit involuntary unemployment insurance- This is also known as involuntary loss of income insurance. It pays for a specific number of monthly loan payments if the policyholder loses his/her job during the term of the coverage.$LPD_EMBEDDED_ITEM_INSU_1
4. Credit property insurance-It protects the personal property used to avail the loan in the event of theft, accident or natural disasters (earthquakes, floods and tornado).

What is the cost of a Credit Insurance policy?

The cost of a Credit Insurance policy depends on various factors such as the loan amount/ debt amount, type of credit and the type of policy. The premiums can be paid either in a Single payment method or through the Monthly Outstanding Balance method.

1. Monthly Outstanding Balance method- This method is usually the most common with credit cards, home equity loans and other similar debts. There are two categories under this mode of payment. Listed below are the two categories:>

   -Open end accounts- The premium is charged monthly and is based on the monthly debt. The amount will be stated as a separate charge on the statement sent out by the lender.

   -Closed end accounts- The amount of debt does not vary and a fixed amount has to be paid every month. Failure to pay this amount will result in cancellation of the policy.

2. Single Payment method- The premium amount is calculated at the time of initiation of the policy and the borrower will be responsible for the entire payment at the time the policy is purchased.