There are various life insurance plans out there, and each one is designed to help your loved ones recover in the event of a serious loss. However, credit life insurance exists to help pay off any outstanding debt.1 Show
The face value of life insurance is the dollar amount equated to the worth of your plan.2 Usually, the face value in a credit life insurance plan decreases over time at the same rate as the debt is being paid off until both values eventually reach zero.3 Essentially, having credit life insurance means that you may be able to eliminate debt from you and your loved ones’ lives entirely. How Credit Life Insurance WorksCredit life insurance might be particularly helpful if a loved one or family member co-signed with you on a loan or mortgage. If you were to pass suddenly, there would be a plan in place to protect them from having to pay off the debt on their own.4 Aflac doesn’t offer credit life insurance, but we have two other plans that may fit your needs for life insurance coverage. Term life insurance provides coverage for a certain period and is an excellent choice for those looking to save money upfront. On the other hand, whole life insurance is a greater financial investment, but you are protected for your entire life. Peace of mind doesn't Don’t wait until it’s too late. Help cover yourself and your family with affordable coverage from Aflac. What Does Credit Life Insurance Cover?The primary coverage benefit of credit life insurance is the protection it allows joint borrowers. These plans help ensure that one person is not left to cover the outstanding debt after the other joint borrower passes.5 For example, let’s say you and your partner sign an auto loan together, and the policyholder passes away. Credit life insurance protects your partner from paying off the remaining amount on their own. In some cases, credit life insurance policies can be written into the loan you are getting.6 However, it is illegal for an entity to require credit life insurance in a loan, so it isn't required to have credit life insurance for a loan.7 Usually, there is no medical exam or fewer health regulations in credit life insurance because these plans have less scrutinous underwriting requirements.8 Credit Life Insurance CostsThe cost of credit life insurance varies depending on the specific plan and company you are working with. However, if the credit life insurance plan is built into a loan, you can expect the recurring payments to be higher because they coincide with the amount of the loan.9 While we can’t provide you with an exact cost for credit life insurance, you can use our life insurance calculator to get a better idea of what your costs will look like if you choose a whole to term life insurance plan with Aflac. Your life insurance premiums may be impacted by your location, age, coverage goals and the number of dependents in your life. Which Life Insurance Plan is Right for Me?Credit life insurance is not the only option if you hope to protect your partner from unwanted debt. Term life insurance may be a better solution because the beneficiary usually receives the death benefit tax-free. In addition, term life insurance is usually less expensive than credit life insurance, and you can specify how long you need coverage for.10 Since term life insurance is less costly, you can use the money saved on premiums to help pay off any debt. Depending on the unique situation, there may even be funds left over for other needs.11 Also, whole life insurance may be a good route if you are looking for coverage that lasts your entire life, but it can be more expensive.12 However, the death benefit in whole life insurance types of plans is usually guaranteed, which can help minimize financial stressors for your beneficiary.13 Get a Quote for Aflac Life InsuranceCredit life insurance can be a helpful solution for paying off debt, but we encourage you to explore all your options to find the best life insurance plan for your needs. Aflac offers whole and term life insurance that provide the coverage you need at an affordable price. Chat with an agent and get a quote to discover which life insurance plan is best for your lifestyle. Still have questions? Explore your life insurance options.
Credit life insurance is generally a type of life insurance that may help repay a loan if you should die before the loan is fully repaid under the terms set out in the account agreement. This is optional coverage. When purchased, the cost of the policy may be added to the principal amount of the loan. In some circumstances, lenders may be required to disclose certain terms and costs of obtaining the insurance. Some policies combine credit life and credit disability into one policy and may contain provisions for cancellation of the policy. Last Reviewed: April 2021 Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on HelpWithMyBank.gov should not be construed as legal advice or a legal opinion of the OCC. What is a credit term life insurance policy?Credit life insurance is a type of life insurance policy designed to pay off a borrower's outstanding debts if the borrower dies. The face value of a credit life insurance policy decreases proportionately with the outstanding loan amount as the loan is paid off over time, until both reach zero value.
What is the most common type of credit insurance?Whole turnover credit insurance
This is the most common type of credit insurance policy and it covers all (or most) of a business through a comprehensive policy based on its turnover – protecting a business from non-payment from all current and future customers over a typical 12 month period.
What is the difference between life insurance and credit life insurance?A life insurance policy typically serves to ease the financial burden of a family after the death of a breadwinner; whereas credit life is a simple pay-out to cover existing debt, provided by a financial institution and can be claimed against should you be permanently disabled, retrenched or die.
Who owns a credit life insurance policy?Who owns a credit life insurance policy? You are the owner of your credit life policy, but the policy's beneficiary is your lender, rather than beneficiaries of your choosing. What are the disadvantages of a credit life insurance policy? The downside of credit life policy is that it's usually only good for one loan.
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What type is credit life insurance?
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