What is Credit Insurance?

Are you wondering what is credit insurance? Very simply, credit insurance is an insurance policy that protects a loan on the chance that you are unable to make the repayments. The next time you have occasion to apply for a loan or mortgage, you will be asked if you want to buy credit insurance, or it might already be included in your loan proposal. If so, it will increase your loan amount and you'll pay additional interest.

Credit insurance usually is optional, which means you don't have to purchase it from the lender. Before deciding to buy credit insurance from a lender, think about your needs, your options, and the rates you're going to pay. You may decide you don't need credit insurance.

If you decide to get credit insurance be aware that it can be an expensive form of insurance. For example, it may be less expensive and more practical for you to get life insurance than credit insurance.

Before deciding to buy credit insurance, ask the lender the following questions:

How much is the credit insurance premium?

Will the credit insurance premium be financed as part of the loan?

Can you pay monthly instead of financing the entire premium as part of your loan?

How much lower would your monthly loan payment be without the credit insurance?

Will the insurance cover the full length of your loan and the full loan amount?

Can you cancel the insurance? If so, what kind of refund is available?

Prior to signing any loan papers, ask the lender whether the loan includes any charges for voluntary credit insurance. If you don't want credit insurance, tell the lender. If the lender still insists that you take out credit insurance, find another lender.

You may freely reprint this article provided the author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

Latest News


HispanicBusiness.com

Fees rise on government-backed loans
CNNMoney.com - 4 hours ago
Effective Oct. 1, the Federal Housing Administration will raise its mortgage insurance fee to 1.75 percent for a new mortgages and many refinanced loans. ...
FHA Hikes Mortgage Premiums Housing Wire
Fannie, Freddie 'profiteering' off borrowers? Inman.com
FHA Raises Its Premiums to Insure Wall Street Journal
MSNBC - Reuters
all 46 news articles

Sallie Mae Lowers Amount for Private Loans, May Face Downgrade
Bloomberg - 2 hours ago
28 (Bloomberg) -- SLM Corp., the biggest US college lender, cut the amount it can borrow for education loans through two banking agreements by $6.3 billion, ...
Sallie Mae says credit facilities have shrunk Reuters
Analysts cite rising costs for SLM CNNMoney.com
SLM Corporation Director Purchases Shares Business Wire (press release)
all 11 news articles

Houston Chronicle

More Trouble in Savings & Loan Industry
Wall Street Journal Blogs, NY - Aug 27, 2008
The Treasury Department’s Office of Thrift Supervision released its quarterly review of the savings and loan industry Wednesday. Some key points: There were ...
US thrifts 2Q loss of $5.4B is second largest ever The Associated Press
US Savings & Loans Institutions Post Second Largest Loss Ever AHN
Thrifts Posted $5.4 Billion Loss in Second Quarter (Update2) Bloomberg
Bizmology - Bizjournals.com
all 357 news articles

First Financial Network, Inc. Announces $23 Million SBA Loan ...
MarketWatch - 3 hours ago
The portfolio is being marketed on behalf of the Federal Deposit Insurance Corporation (FDIC) and is comprised of SBA related loans from the recently failed ...

HispanicBusiness.com

Banks borrow more from Fed; Wall Street takes pass
International Herald Tribune, France - 4 hours ago
27, Wall Street firms didn't take out any loans, the fourth straight period of no action. Their borrowing, however, averaged as high as $38.1 billion a day ...
FACTBOX-Fed's liquidity tools Forbes
CHRONOLOGY-Fed actions to boost liquidity Reuters
A Tantalizing Conflict of Interest Motley Fool
Forbes - Reuters
all 32 news articles

New Borrow Smart Alabama(TM) Member Promotes Responsible Use of Loans
MarketWatch - 9 hours ago
We never want them to look at it as a long term option or borrow more than they'll be able to pay back when their loan is due. "And we know that the large ...

More mortgage tips: The lowdown on home loans
Indianapolis Star, United States - 19 hours ago
Know the loan terms before signing. "Ask the lender for a good-faith estimate that should be used as a basis to confirm the final numbers. ...
Mortgage applications up 1st time in 3 weeks: report Reuters
all 23 news articles

Commercial loans straining Minnesota banks
Minneapolis Star Tribune, MN - 10 hours ago
But bank watchdogs who spoke in Bloomington on Wednesday warned that the list already is growing longer -- thanks to loans going bad in a hurry. ...

Moody's may cut SLM on reduced loan commitments
Reuters - 4 hours ago
N: Quote, Profile, Research, Stock Buzz), after the student lender said it has reduced its commitment amounts on a number of loans. ...

Fitch Rates Maryland CDA's $100MM 2008B&C 'AA'; $50MM 2008D 'AA/F1+'
MarketWatch - 6 hours ago
The transferred funds, along with the proceeds from the 2008 series C bonds, will be used to purchase new mortgage loans to continue CDA's single-family, ...

Resources