Credit insurance is optional coverage a person can take out to protect their credit. Credit insurance may be expensive for some but those with a high balance may want to take out this insurance.
Types of Credit Insurance
There are three main options when it comes to credit insurance. A person can get the insurance that will cover their credit cards if they die. There is also insurance that will cover the monthly payment if they become disabled. There is insurance that will cover the balance if a person becomes unemployed through no fault of their own.
Facts About Credit Insurance
There is some basic information about credit insurance that the consumer should know.
A lender cannot force a person to purchase credit insurance. They may want a person to put up collateral but they do not have to buy this insurance.
The cost of the insurance will be different from the annual percentage rate on the credit card. It will be different from other charges. The amount of money paid for this insurance and the APR can be very different. Some policies will allow a person to pay for this insurance annually but most want a person to pay monthly.
If a person has a low credit score they may be encouraged to get this insurance. This will further prevent damage to their credit if something were to happen. This will add to the monthly expense of the credit card bill so a person needs to keep this in mind. They need to make sure they can afford the credit card payment and the insurance.
Credit insurance can help a person with their payments in case of unfortunate situations. While this insurance is expensive a person needs to think if this added protection would be right for them and their family.