In the case of an unexpected death, will you leave financial struggles behind for your family?
Recently, there has been a sudden surge in the demand for credit life insurance, and it is believed that the cause is the economy, in combination with rapidly expanding consumer debt, which includes car loans, mortgages, and credit cards.
This new coverage product was designed to help people to protect their loved ones against financial burdens.
Though the most common form of creditor life insurance – mortgage life policies – have been in existence for quite some time now, the demand for broader forms of coverage has increased significantly as individuals carry a larger number of different types of debt.
Creditor life insurance helps to make sure that debt isn’t left behind with an untimely death.
Standard life coverage can be challenging enough to discuss as it centers on the concept that we will all die one day, and that people will be left behind. It can be terrifying to think that a family member’s death could leave the surviving loved ones with financial devastation. In this, peace of mind can be an almost priceless state.
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It is for this reason that insurers have broken away with conventional term policies – which allow a beneficiary to be named – in order to allow the policyholder to name a lender as the beneficiary, in order to cover debts. This indirectly benefits the survivors because it means that any debt that is left outstanding at the time of the policyholder’s death will not be deducted from the estate’s assets – which, in many cases, can exceed the estate’s value.
As in the case of regular term policies, creditor life insurance plans can also provide assistance should the policyholder suffer critical illness, job loss, or a disability. This type of coverage is often offered as an additional option when a line of credit or a loan is taken out, which provides the lender with an opportunity to make certain that it will receive the funds even if the borrower should suffer a significant misfortune in life, and to protect his or her family from having to take on the debt in that event.