3 reasons why line of credit insurance equals peace of mind

As you try to balance living for today with preparing for the future, line of credit insurance can help save the day if personal disaster strikes. How will this type of coverage work for you? And what's covered?

• If you’ve ever needed to complete a home renovation, buy a car or pay for an expected (or unexpected) expense, odds are you took out a personal line of credit.

As you work to pay back what you borrowed, the idea that you might not be able to continue to make the necessary payments for some reason may not have ever crossed your mind.

Line of credit insurance is designed to protect you and your family in cases where something is preventing you from having the funds necessary to repay your debt.

• It’s a good choice for people who don’t have large sums of money in a savings account or other additional resources that can be called upon were something unfortunate to happen.

You can choose the type of credit protection that is best for you. The three types of line of credit insurance that most lenders offer are:

• Critical illness coverage
• Disability coverage
• Life coverage

1. Critical illness coverage: If you are diagnosed with an illness

• If the illness is included in your selected coverage, the coverage will pay the balance on your loan, up to a certain pre-established amount.

2. Disability coverage: If you become disabled and are unable to work

• This coverage ensures you a set monthly benefit that will help you meet your payments, which in turn helps you protect your credit score. The amount you are eligible for is predetermined.

3. Life coverage: If you die

• Life coverage is used to pay your outstanding loan balance, up to a pre-set maximum.

Talk to your lender.

• Different lenders offer different coverage options, so you first need to see what’s available to you, and then you can go about applying via the process established by that lender.

Typically, there is no delay in receiving approval and your insurance premiums can be added right to your account.

• Ask your lender whether or not there are any specific requirements associated with the type of coverage you have chosen.

In the end, whether or not you apply for line of credit insurance is a completely personal decision.

• If your budget is already tight, the additional expense may not seem worth it.
• But if you are able to afford the premiums, the peace of mind you’ll get in return in the event of injury, disability or your passing away may be well worth the expense.