Would you like to know what credit insurance is? Credit insurance covers your loan and credit card payments in case of any occurrence that may hinder you from continuing to pay, like disability or death. It ensures the lender continues to receive his payment if something happens. Let’s find out more about credit insurance below.
Types of Credit Insurance
• Credit Life Insurance
Credit life insurance pays off the balance when you die. This insurance removes the burden of having your family pay the debts.
• Credit Involuntary Employment Insurance
This type of insurance covers payments when you lose your job without being at fault. The benefits do not apply if you quit or get fired.
• Credit Disability Insurance
Credit disability insurance covers the minimum payments when you become disabled. It does not, however, apply immediately you become disabled. You are given a certain waiting period for the benefits to kick in.
Benefits of Credit Insurance
• Protects you from bad debts
Credit insurance protects you from bad debts in many ways. First, they can help you identify potential losses that the insurers analyze. Credit insurance removes the credit risk from your balance sheet by transferring the risks to the insurer’s balance sheet. Credit insurance can also reduce lousy debt provision since all the debts.
• Empowers Business Growth
Credit insurance reinforces the enhanced credit management processes, which allow you to extend payment terms to your customers safely. In addition to that, it also supports mergers and acquisitions by providing investee corporations with protection against bad debts from attained and merged client portfolios.
Credit insurance assures the payment of debts to creditors. It is not a necessity unless you do not have other insurances like life insurance. However, it has its benefits; hence it is beneficial for people without other insurances.