- If you have ever taken out a mortgage or other type of large loan, the lender may have recommended that you also purchase creditor life insurance. But what exactly is creditor life insurance and what are the benefits?
Simply put, a creditor life insurance policy is one that allows you to keep your financial obligations to the lender in the event that you pass away before the debt is paid. (There are also creditor disability and creditor critical illness insurance policies, but those are topics for another day.)
Having creditor life insurance comes with a number of benefits. Here, we will discuss two of the main benefits.
You will have more in your estate to leave to your family.
If you pass away with debt, your creditors will typically be paid off before any of the estate can be distributed to your family. If the amount owing is large (like it could be if the debt is a mortgage), that might mean very little is left over for your spouse and children. Additionally, if your family is forced to sell your home to pay off the debt, this could add even more stress to an already difficult time.
With creditor life insurance, your debts will be paid off in full and your estate will be preserved for your loved ones.
Getting creditor life insurance is easy.
Some will recommend that you get term life insurance instead of creditor insurance – and in certain circumstances, this can be a good strategy. But term life insurance usually requires a lot of medical questions as well as a paramedical examination. Not to mention, underwriting can take some time.
So, if you don’t like needles, or if you have conditions that might make getting regular life insurance difficult, or if you just want a process that is fast and easy, then getting creditor life insurance could be the better choice for you.
Most people never take out a mortgage or other loan thinking that they might not live to see the day when it is paid off, but in a world where anything can happen, it is always best to be prepared. With creditor life insurance, you can have the peace of mind that your financial obligations will be met and that no additional strain will be put on your family in the event of an unexpected death.
When we say YES! We stand behind our promise.®™