If you’ve recently taken out a mortgage, refinance loan or home equity loan, you have probably received a solicitation for a mortgage insurance. Do you need it?
A term or permanent life policy may cost you less than mortgage insurance and give your beneficiary greater flexibility.
Credit life differs from other life insurance in an important way. When you buy a life insurance policy, you select the beneficiary, who can use the benefits for any purpose. When you buy credit insurance, however, the policy benefit goes directly to 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. Credit insurance can be an expensive form of insurance. A term or permanent life policy may cost you less and give your beneficiary greater flexibility.
Before you sign any loan papers, ask the lender whether the loan includes any charges for voluntary credit insurance. And review your loan papers carefully to be sure they have been drawn up correctly. Lenders can’t deny you credit if you don’t buy optional credit insurance—and if you don’t buy it directly from them. If a lender tells you that you’ll only get the loan if you buy the optional credit insurance, report the lender to the state attorney general, state insurance commissioner or the Federal Trade Commission (FTC).
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