Credit life insurance is exactly what the name implies - life insurance that will pay off the amount of debt on a line of credit, such as a mortgage or credit card. Getting credit life insurance on a mortgage can be relatively inexpensive and can protect loved ones in the event of an unexpected death.
Difficulty: Moderately Easy
Things You'll Need
- Online Mortgage/finance Services
- Phone Books
Decide how much coverage you want.
Look up insurance agents in the local phone directory. Call around to a number of insurance agents who offer life insurance.
Ask about the monthly or annual premium for term insurance, which is strictly renewable coverage on your life without any frills, and is considered the best value for covering a mortgage credit.
Ask if this rate is fixed for any length of time, or if it will rise as you get older.
Ask if the coverage amount will remain the same over time.
Ask if you can cancel your insurance at any time.
Apply for the policy that best fits your needs.
Tips & Warnings
- Generally, with a little effort, you can locate an annual, renewable term policy that will be priced cheaper than what is offered through your lender.
- While some people prefer whole life insurance (insurance that builds up cash value), term insurance is generally considered the most cost-effective way to cover yourself and your home.
- Your lender may suggest buying mortgage insurance. This is simply term life insurance that will decrease in amount as you pay off your house. This will pay off your house in the event you die, but the beneficiary will be the lender, not your spouse.
- Getting life insurance is not automatic. You must be accepted, or underwritten, by the insurer.
- If you have a hazardous occupation, or are a smoker, expect to pay a higher premium.