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[04:03:47 AM Thursday, May 24, 2007]
Credit Card Offers - Credit Protection Insurance
Credit protection insurance is often overlooked but can be a good option to look into. When thinking of insurance the types that usually comes to mind is health insurance and life insurance. But there are a lot of people that are beginning to take advantage of credit protection insurance. Credit protection insurance is also called payment protection.
Credit protection insurance typically makes the least payments that are possible, usually 2%-3% of the balance on such things as personal loans, credit cards and credit lines, and for cases of unemployment or disability. In the case of passing away the account that you have has to be fully paid off.
Basically credit protection insurance is structured to ensure that your required payments are decreased or completely done away with. If you are not able to work or you die credit protection insurance will help you in keeping your benefits, such as disability or death, from being taken in by debts.
Two by Two
The two main forms of credit protection insurance are credit disability and credit life insurance. Credit disability insurance makes the loan payments for you so you will not lose anything financially if you default on a loan because of a disability you have that can hurt your earning potential.
Credit life insurance works in the same way if you pass away. The insurance ensures that payments will be made for the loans you took out.
Defining the Style
Typically insurance companies and financial institutions, mainly banks that are in a partnership will offer you some type of credit protection insurance to you. The cost of the insurance plan is paid for as a portion of the loan and is added into the payment you make every month. This type of insurance is optional as it gives protection for the account of the individual who holds the account.
The Flip Side of the Coin
One of the pros of credit protection insurance is that no physical exam has to be taken in order to get coverage. Credit protection insurance also gives you the option to but the exact same coverage that is needed to protect the loans you have. This means that you can buy a small plan that is conservative. The coverage will be the same price as your age, sex, or occupation does not matter.
On the negative side sometimes the insurance can be expensive and there are various limitations on the length of time the insurance will pay and what type of workers will get coverage, among other restrictions. When looking into credit protection insurance see if it is the best deal for you and if you, or your family, would be financially hurt if you were disabled or passed away.
In finding out if credit protection is a good option for you your specific needs have to be looked at based on the amount that you currently own on the loans you have. You should make a calculation for the disability plan you currently have. You should also consider that most employers pay a fixed percentage of your salary for a limited amount of time.
Credit protection insurance may be a good option for you if the current disability plan you currently have does not cover your expenses every month, which include your monthly debt payments.
You should ask yourself these questions:
If you cant pay the bills who will? Most people purchase credit protection insurance so their debts will not be a financial burden to their dependents.
Is the small amount of the new loan enough so you can make payments that credit insurance can handle?
If a circumstance arouse where you could not work can you still make payments?
Does your current insurance or savings have the ability to cover your needs? It is recommended by experts that a 4-person family have life insurance that is around 6-7 times what they make every year, or around 3 times the entire yearly income of the household.
Credit protection insurance is not the best option for every individual but it is a good option for some, especially if they carry a loan. If credit protection is not right for your situation you should still make sure that you have financial means to take care of dependents if something were to happen to you.
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