Hello, everyone! Welcome to my Personal Insurance Information Series. This series is designed to give you the basic knowledge you need to make informed decisions when purchasing personal insurance.Heather
Creditor insurance is most common in the form of mortgage insurance. Some other creditors will also offer insurance to cover your debt if you fail to pay.
If at all possible, I advise you to avoid most forms of creditor insurance. These policies are not guaranteed, and claims are often denied.
Term Life Insurance is insurance designed to give high coverage at a low rate. It fills an important need, but you should also have one of the other two types of life insurance as well.
Universal Life insurance (UL) is commonly sold as “Permanent Insurance” or “Whole Life Insurance”. This is the most common long-term life insurance solution.
Participating Life Insurance (PAR) is the best life insurance policy. It is not offered by all companies anymore. The participating stands for you getting to participate in the insurance company’s profits through dividends paid on your policy.
Disability insurance (DI) is designed to cover loss of income. It pays out monthly and there is a maximum amount that you are allowed to get. Some industries are not eligible for this coverage.
Critical Illness Insurance (CI) covers more than 20 basic illnesses including heart attack, stroke, and cancer. It is generally considered the next best thing to disability coverage. It pays out in one lump sum.
Group Coverage Policies
This is the coverage you get at work, as part of a group. It usually has both health and life components, among other available types of coverage.
There is often the option for additional coverage with these policies but it is not something I would recommend getting. When you get the coverage there is usually an information session and a coverage booklet provided. The problem is most people will never read the book, and they do not know what to ask at the information session.
Specialized Insurance Policies
Insurance companies sell some products that have a narrower focus than life, disability or critical illness. Some are designed to provide a more specific coverage, like cancer guard, and some are designed for a specific purpose, such as buy and sell insurance, which is really just life insurance with a purpose.
The issue with these is just that most people don’t know they exist. If you don’t know about them, the only way to find out is to have that all-important needs analysis with an insurance representative.
The third article in this series discusses the different types of creditor’s insurances that you can buy, why you probably shouldn’t and what you can do instead.