When sickness or injury prevents you from being able to perform the duties of your job, or if you lose your job completely, finding the money to continue to pay your mortgage, loans, credit cards, or line of credit can be extremely overwhelming for you or your family.
Credit protection insurance is a coverage program that helps you or your family make sure these loan payments are made. These insurance programs are very flexible, easy to obtain, and can be custom tailored to any type of financing.
Most financial institutions, banks, credit unions, and insurance companies offer this form of financial insurance to cover:
- Personal lines of credit
- Mortgage loans, and mortgage lines of credit
- Personal loans
- Commercial mortgage loans
- Farm loans
- Credit card balances
Credit Protection is open to Canadian residents between the ages of 18 and 65. You can choose one or more of the coverage options, depending on your circumstances and your unique needs.
Four Major Types of Credit Protection Insurance
If you have been diagnosed with a critical illness, this coverage can pay the outstanding balance on your lines of credit or loans. This is usually done by a lump sum payment. The cost of critical illness insurance is determined by factors such as your age, the balance of the loan you are covering, and whether or not you need single, joint, or multiple coverage.
With Critical Illness insurance, your monthly expenses like mortgage payments and line of credit payments are taken care of, allowing you to use your money for any other health related expenses you may need to assist you.
Applying for critical illness coverage usually involves answering a few basic health questions. In most cases, no medical examination is required.
In the event of your death, this insurance can pay the outstanding balance on the loans or mortgages you have covered, freeing the people you love and care about from having to pay off these debts. The cost of life coverage is determined by factors such as your age, the balance of the loan you are covering, and whether or not you need single, joint, or multiple coverage.
If you have been diagnosed with a terminal illness that is expected to cause your death within one year, many policies will provide an early payout.
Applying for life coverage usually involves answering a few basic health questions. In most cases, no medical examination is required.
If you become disabled and unable to work, disability coverage will make your minimum monthly payments on the insured loans. Most policies cover your monthly payments as well as providing a maximum monthly benefit amount for up to 2 years. Many policies can be approved without a medical questionnaire or examination.
Premiums for disability coverage are based on the amount of the loans during the billing period so you only pay for the coverage you need. For example, if your line of credit is at zero, there is no premium charged, but the coverage remains in place for when you do have a balance.
Disability insurance can be applied to self-employed workers in certain cases.
If you lose your job involuntarily, job loss insurance can cover your minimum monthly payment on your insured loans. The payments will be made on the loan’s due dates, so your credit rating is not affected.
With job loss insurance, the payments are made directly to your financial institution on your behalf.