What is credit insurance?

Discussion in Credit Insurance started by redheadinlove • Aug 29, 2012.

  1. redheadinlove

    redheadinloveNew Member

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    This was my first question and since there are no posts, I thought that maybe others might have the same question.

    Forgive me for copy and pasting this, but I figured it would be better than me trying to explain something I know nothing about.

    "Credit insurance is a form of insurance coverage that is available to both individuals and businesses. The coverage provides protection in the event that the policy holder is rendered unable to pay on outstanding debt due to any incident that is covered in the terms of the policy. Common factors that may invoke the provisions contained within a credit insurance policy include the loss of a job, death of the insured party, or an accident that disables the policyholder."

    Link to source below.

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  2. copper

    copperMember

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    Nice for acknowledgement. I didn't prefered to know a lot about it a lot but I think it is really a helpful one.
     
  3. dissn_it

    dissn_itActive Member

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    The times we have gone ahead and added the credit insurance, we have never used it. They seem to offer it and just about anything anymore. I would say that it would be useful for only major purchases, like a home or an auto but it is pointless for smaller purchases. It is similar to extended warranties, you get them and pay for them but never use them.
     
  4. pafjlh

    pafjlhActive Member

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    For me credit insurance is a double edge sword. I guess it will come down to the type of plan you have. I can name two different scenarios with such a plan, that ironically played out around the same time. The first one was a plan that my mother had on her main credit card. It said it would cover the debt of the balance on the account if the person was deceased, in other words a sort of extra life insurance plan on the credit account. The minute my sister informed them of our mothers death, they squared the account instantly no questions asked. Now I also had a plan on one of my cards that said it would pay a certain amount to a person who had lost their job or was out of work for an extended period of time due to injury or illness. Because I worked as a care attendant for my mother I found myself out of work after her death. I filed a claim with this company, but they came up with an excuse not to pay, that they felt justified in giving. So, they never paid out a single penny, and I dropped the policy all together. As I said above some of these are good idea to get into and they do live up to what they claim. Others will use every loop hole in the book to get out of paying. My best advice read up on the policy before getting involved with it, you could end up paying for something that doesn't intend to ever live up to its coverage. That is what happened to me.
     
  5. Lostvalleyguy

    LostvalleyguyActive Member

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    Credit insurance (at least the type I see) will usually cover the minimum payment on your credit cards in the event that you are unable to do so. It doesn't cover you if you fail to pay or haven't the money to pay - only if you are too ill to pay. It will sometimes make a mortgage payment or a car payment as well. If you are not deceased, it can be tough to get it up and running as the insurance company will want to deal with you to start it up and not someone else. If I am healthy enough to deal with an insurance company, I am healthy enough to log into my bank account to make payments.
     
  6. Happyflowerlady

    HappyflowerladyWell-Known Member

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    Credit insurance is good when you have a large amount, such as paying for that new car, or expensive television or living room set. If you just bought a new microwave----- then no, not worth it.
    Since Workman's Comp will probably give you some kind of income when you are hurt (assuming it was at work) then you can use that to pay the rent and utility bill; but there may not be enough to cover the other payments that you were able to do when you are working.
    The type of job that you have is very important as well. If you have a job where accidents are likely; then credit insurance is a lot more important than if you just work in an office all day.
     
  7. Dybbuk Jones

    Dybbuk JonesNew Member

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    I used to have credit insurance on all my cards, but it was almost impossible to claim it when I was out of work. I also note that if I can't pay my credit cards I can just not pay my credit cards and wait a few years for them to fall off my credit report.

    For the most part credit insurance seems like a scam along the lines of annual fees that all the credit card companies to take more money from their customers without much benefit.
     
  8. efrain silva

    efrain silvaMember

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    Credit insurance is exactly what the name implies. It insures your credit. It is backup insurance for your credit in the event that you ever seem to lose a credit card or such. Just as travel insurance covers you when you travel, credit insurance does a very similar thing here.
     
  9. ptahm22

    ptahm22Active Member

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    Credit insurance is a type of life insurance policy purchased by a borrower that pays off one or more existing debts in the event of a death, disability, or in rare cases, unemployment. That's just a simple definition but it describes credit insurance to the letter.
     
  10. Jamille

    JamilleActive Member

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    I've been offered credit insurance so many times by my credit card providers but I've always declined. Most credit cards in my country charge a percentage of the outstanding balance per month as premium. I figured that I might as well use the amount to pay my credit card or treat my family to a nice dinner once a month. My credit card debts are manageable so I don't feel like I need this type of insurance. I do have a Mortgage Redemption Insurance, though, which will pay for my home mortgage in case of death or disability.
     
  11. Krissttina Isobe

    Krissttina IsobeWell-Known Member

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    You should have seen the credit cards customer service when it first came out and I didn't take up on it. They made it a special point to call me and ask me why haven't I taken credit ins. on my cards!? I calmly told them I don't insure my credit cards because, Hawaii is exempt from it. They never called me again. I made a friend of a retired ins. agent who once schooled me about being exempt, portion of the ins. coverage. I read the ins. policy and found all the credit ins. exempted Hawaii. :D
     
  12. larryl332

    larryl332Active Member

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    I have heard some various things here, and I would say that if it is not related to protection against identity theft or credit theft and things of that nature then it might be not all that worth it. Just watch your spending habits.
     
  13. explorerx7

    explorerx7Active Member

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    I know that many loans companies include this type of insurance in loan repayment arrangements.In some instances,if a loanee should die, the loan would be automatically paid off, therefore, family members or other interested parties would be spared from the burden of having to continue the loan repayment.