April 21, 2009, 5:00 am

Some Cases Where Credit Insurance is Useful

by: The Financial Blogger    Category: Insurance
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insurancePeople that know me know that I am very hard to convince of something. It is nothing related to be closed minded. Actually, I am very opened minded. On the other side, I ask a lot of questions in order to understand correctly and if you don’t have the answer, than I won’t change my opinion.

I already wrote about the fact that I didn’t believe much in credit insurance product for several reasons. However, I decided to go further in my research and meet with the “insurance guy” from our company one more time and ask him why the hell should I subscribe for credit insurance on my house.

Some of his reasoning was the usual “insurance bullshit” like: have you though of your wife and children? You know so and so, he got cancer and couldn’t pay his mortgage because he was seriously ill, or the famous ahh, it’s your choice.

When we pass that step (I cut him pretty much in the middle of his speech), he surprised me. While the emotional reasons didn’t have any effects on me (when it comes down to numbers, you lost me at hello if you try to play with my emotions… show me facts, show me proof!), he was able to bring good points:

#1 Get insured while you can

Since I am in favour of getting the biggest line of credit while you have a good financial position (not to spend but as an emergency fund), I can definitely agree with this point. When you get your insurance in the 20’s, you are sure to get insured and to get a good price out of it. The good thing about insurance credit is that it lasts as long as you have your debt. Considering that a mortgage while last 25 years or more, chances are that you can get sick or die during that period of time.

#2 Combination of products makes the insurance very cheap

Another important factor, as I mentioned in my previous post against credit insurance product, is that when you combine more than one type of insurance (you have access to life insurance, critical illness insurance and disability insurance), the overall price is quite competitive. Actually, it is very hard for insurance agent to find a better deal elsewhere.

#3 Insurance premium on line of credit depends on the balanced used

Therefore, it is free when your balance is at 0. Now you are asking: why insure a debt that is at 0 since I won’t get any money back if something happens to me? Easy answer: got back to reason #1. If you are insurable and it doesn’t cost a thing to get it, why not getting insurance for free while you are a good candidate?

As you can see, there are still good reasons to subscribe to credit insurance product. One thing is for sure; regardless if you take credit insurance or not, make sure that you are well insured overall. Life really sucks when something bad happens and you don’t have the proper coverage!

image source: flickr

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