US Credit Insurance, Credit Insurance USA, American Credit Insurance

By: EconomyWatch   Date: 26 May 2010

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US credit insurance is a security cover bought to protect a lender from losses suffered due to a borrower defaulting on payments on account of a specific reason. Credit insurance USA can be taken by an individual or a business entity. While the insurance taken by an individual is simply called credit insurance, the one bought by a business entity is termed as business credit insurance.

US Credit Insurance: Types

The types of US credit insurance are:

  • Credit life insurance: This insurance covers losses to a lender in case of the untimely death of a policyholder (or a borrower).
  • Credit disability insurance: This insurance pays off the outstanding loan amount to a lender in case a policyholder is unable to work as a result of an accident or ill health. This insurance is also called credit accident and health insurance.
  • Involuntary unemployment insurance: This insurance helps a policyholder in paying off debt in case s/he is displaced from his/her job. The loss of job, however, should not be the result of any misdeed or fault of the policyholder. This insurance is only for involuntary loss of income.
  • Credit property insurance: This insurance helps a policyholder protect personal property that has been used as security for a loan, in case of damage by events like theft, accident or natural disaster.


    • US Credit Insurance: Points to Consider While Buying

    A person, taking a mortgage or a personal loan, has the option of buying the Credit insurance from either the lender or a private insurance company. Whenever a borrower applies for a loan, a lender generally gives the former an option to include this insurance in the loan amount. At times, lenders add the policy in the loan amount even without informing a borrower. However, according to the Federal Trade Commission (FTC), this is illegal, as borrowers have the right to decide whether they need US credit insurance and, if so, from where.

    While buying US credit insurance, one needs to consider the following factors:

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  • What is the premium?
  • Will the premium be considered in the loan? If yes, by how much will the loan and interest rise?
  • Is it possible to pay the premium on a monthly basis instead of adding the entire premium in the loan?
  • Will the insurance policy be valid till the time you repay the loan completely or till the end of the loan repayment period?
  • What will be the monthly loan repayment amount, in the absence of any credit insurance?
  • Will the insurance coverage start from the day the policy is bought or is there a waiting period?

    • In case you decide against buying credit insurance while taking a loan and a lender is still pressurizing you, find another lender, instead of giving in.


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