It is possible to purchase insurance on credit card, automobile and other debt, with a few or no health questions. Known as "credit insurance," the insurer pays a benefit in case you become disabled, ("credit disability insurance"), lose your job, ("credit unemployment insurance"), or die ("credit life insurance").
Credit insurance can be very useful for people who have a health condition which could be terminal. For instance, credit life insurance can be used creatively to increase the size of your estate by paying off debt your estate would otherwise have to pay.
All credit insurance has the following features in common:
- There no medical exams and few or no health questions -- even for credit life and credit disability insurance.
- There is generally a waiting period before the benefits become effective.
- There may be a period of time (such as 6 or 12 months) during which no benefit or a reduced benefit is paid due to a loss caused by a pre-existinghealth condition.
- Premiums are generally expressed as a percentage of the outstanding balance. Because of this, the premium cost generally changes each month.
Today, credit insurance coverages generally come bundled together -- if you want one, you have to take them all.
Credit insurance is not the same as "Credit Protection" which is a term often used for Identity Theft coverage. Most Identity Theft contracts are not really a form of insurance. Instead they generally only provide a copy of your credit report and notification when someone accesses your file. They're usually not worth the fee. You can usually do this easily on your own - plus put a freeze on your credit. (To learn more, see: Identity Theft: How And Why To Protect Your Credit From Identity Theft)
Credit insurance should be used in addition to any other life and other insurance you have or for which you can qualify -- not instead of it. For information about how to purchase life insurance with a health history, click here.
For additional information, see: