What are the advantages to a borrower to buy credit life insurance?
A credit life insurance policy prevents the borrower’s family to repay the loan in the case of the borrower’s death or disability. Following are the advantages of credit life insurance policy to the borrower –
1. Save your family from financial hardship – If you have credit life insurance, you are not leaving behind debt for your family to pay in case of your untimely death or disability. The credit life insurance policy will pay the outstanding loan amount to the lender and settle your dues.
2. Ease of policy issuance – Credit life insurance is a good option if you do not have a life insurance policy for yourself. If you are worried about how your debts would be paid, in case of your untimely death or disability, it is a good policy selection. This policy is easy to be issued without requiring any medical check-ups.
3. Bargain on interest cost – Credit life insurance is a common add-on proposed by lenders when you are taking a loan. Depending on the type of loan, lenders may ask the borrower to enroll for the policy or make it mandatory for all borrowers to enroll. Having this policy reduces the risk of default on the loan due to death or disability of the borrower. Hence, lenders are inclined toward offering a discount in interest costs and EMIs, if you are covered under credit life insurance.
4. Premium payments – The premium for credit life insurance is not paid by the borrower directly. It is added to the loan amount and built-in EMIs. Hence, the overall process does not put any financial stress on the borrower for insurance premiums.