Today is National Life Insurance Day, so we thought it would be a good time to talk about credit life and disability insurance. Credit Life and Disability Insurances are optional add on products to your loan and can be cancelled by you at any time. Refund amounts will be credited to your loan balance. You can select to purchase life, disability or both at the time of your loan closing.
Credit life insurance is designed to payoff or reduce the loan in the event of the borrower’s death. The lender is the beneficiary of this life insurance policy and will receive the payment to payoff or reduce the loan amount.
Credit disability insurance is designed to pay the scheduled monthly payment (or portion of it) if the borrower becomes totally disabled due to a covered injury or sickness as defined in the policy. The payments are paid to the lender who will then apply it to the loan to help make the monthly payments. When purchasing credit disability insurance you can choose for a 7, 14 or 30 day waiting period. This insurance takes the worry out of how to make your loan payments while you are off of work due to a covered injury or sickness.