Best Credit Life Insurance Policies

You may already know about life insurance, but have you heard about credit life insurance? The insurance world really can be confusing. Benzinga has put together this guide to credit life insurance to help you better understand what this insurance product is and if you can benefit from it. 

Quick Look: Best Credit Life Insurance Companies

• Best for Credit Insurance Options: Securian
• Best for Combining Policies: J.T. Miller Company
• Best for Agricultural Industry Benefits: American AgCredit
• Best for Specialty Products: American National
• Best for Customizable Policies: Protective

Best Credit Life Insurance Companies

We talk a lot about the best life insurance companies, but let’s look at the best credit life insurance companies.

1. Securian

One of the confusing things about credit life insurance is that it can sometimes get mixed up or lumped together with other types of credit insurance options. Securian is one of the insurance companies that can offer you a variety of credit insurance products. This makes it easier for you to separate the policies and work directly with the company to understand the benefits of each so you can choose the right option for your needs.

In addition to credit life insurance, you can benefit from credit disability insurance, credit property insurance and credit involuntary unemployment insurance. Each insurance product can help if you face a hardship that makes it difficult to repay your loan.

2. J.T. Miller Company

When trying to find cheap life insurance, some people prefer to combine their insurance policies. J.T. Miller offers coverage options in addition to its credit life insurance policies, including occupation-based disablement coverage and dread disease coverage. Its policies are valid for the entire loan contract period until there is a disablement, death or dread disease claim, depending on your policy.

After a claim has been made, this insurance company covers your borrowers immediately to eliminate your outstanding short- or long-term debt. In some cases, J.T. Miller may be able to combine credit life and credit disability policies for you.

3. American AgCredit

It’s no secret that the agricultural industry has suffered lately. Luckily, there are companies that specialize in providing financial services to agricultural customers to help them stay on top of things. This unique company offers a wide variety of insurance products, as well as mortgage financing, real estate loans and lines of credit.

American AgCredit has been around since 1916 and is part of the nationwide Farm Credit System. If you’re involved in the agriculture industry, contacting American AgCredit about its products is a great option for you.

4. American National

It’s always nice to work with a company that doesn’t just see things in black and white. American National is an insurance company that offers several insurance products to its customers, including credit life insurance. It offers its credit life insurance policies as a part of its specialty product offerings, which are designed to help ease the worry of unexpected life events. You can purchase a credit life and credit disability insurance policy from American National, providing broader coverage to help your family if your income is lost due to death or disability.

The company additionally offers credit involuntary unemployment insurance to provide further coverage if you become involuntarily unemployed while you have the policy. American National also offers guaranteed asset protection (GAP), credit protection for collateralized loans and more.

5. Protective 

Protective advertises itself as a company that is full of representatives that have a passion for doing right by its customers. It understands that the needs of its customers change over time and is committed to working with you to provide flexibility with your coverage.

Protective offers the ability to customize your policy with additional riders to ensure that you are receiving the most complete coverage. In addition to credit life insurance policies, you can customize whole life insurance policies, universal life insurance policies, term life insurance policies and more.

What is Credit Life Insurance?

A life insurance policy is designed to help you leave your loved ones with a safety net when you pass away. It’s a great help if you’re the breadwinner in your family or if you want to leave something behind for your adult children and grandchildren. 

But there’s something else people overlook. Debt is a huge issue in today’s world, especially if you’ve gone to college in the last few decades. So what happens to your debt when you die?

That’s where credit life insurance comes in. This is a specific type of life insurance policy that was created to solve this very issue. It will pay off your outstanding debts when you pass away. Credit life insurance is voluntary, or optional. You may be a great candidate, however, for this type of insurance. 

How Credit Life Insurance Works

You’ll probably find yourself being offered a credit life insurance policy when you’re taking out a loan. It’s typically sold by banks when there is a mortgage closing. You might also hear about it when you finance your car or open a new line of credit. It’s usually offered at this time as a guarantee that your loan will be paid off even if you die. Similar to a typical life insurance policy, the selling point is that this policy will protect your loved ones if you pass away.

Credit life insurance policies are issued through an insurance company that partners with the lender of your loan or line of credit. When you purchase the policy, the face value of the policy is equal to the amount of money you owe on your loan. As you pay down your loan over time, the face value of your policy decreases. The coverage of your policy usually begins when you originate your loan. The premium for your credit life insurance policy is typically rolled into your monthly loan payments.

If you pass away before your loan is completely repaid, your credit life insurance policy will cover the remainder of your loan. The policy value at that point will be paid directly to the lender of your loan.

When Credit Life Insurance Is Worth It

Credit life insurance might be sounding like a good idea, right? It’s especially appealing if you’re making a huge purchase and you’re already having concerns about that. That’s why banks will use that exact opportunity to try to sell it to you. In some cases, credit life insurance could actually be a good idea.

If you find yourself in any of these situations, it may be worth considering it:

• If you’ve cosigned your mortgage, car loan or another loan or line of credit with someone else. In these cases, if you pass away, your cosigner will be completely responsible for the remainder of the payments on your loan or line of credit. This can be a huge financial setback for your cosigner. 
• If you’re married and you’re the main earner or the only spouse with an income. A credit life insurance policy can offer an additional layer of protection for your spouse if you pass away. 
• If you live in a state that recognizes community property. In this case, your spouse could be on the hook for your debts, even if their name isn’t also on it.

When Credit Life Insurance Is Not Worth It

Even though credit life insurance might sound like a great idea, it’s not always worth the cost. Here are some examples of when you might want to look the other way if you’re offered a credit life insurance policy.

• If you want to leave money to your loved ones when you die. Here’s the concern: If you are a policyholder and you pass away, your loved ones won’t receive any direct benefit. As far as life insurance payouts go, the payout of your policy will go right to the lender of your loan or credit line. Even though it may have been sold to you as a way to protect your loved ones, they won’t actually see a dime.
• If you have children or next-of-kin but no spouse. Generally your children or heirs will not be held liable for any unpaid debts when you pass away. So getting a credit life insurance policy won’t actually do much good for your family in this case.
• If you don’t own property with your spouse and don’t live in a community property state. In this case, since you’re the only one on your mortgage or car loan, you’re the only person who can be held liable for the payments. Having a credit life insurance policy wouldn’t do your family any good if you suddenly pass away.
• If you don’t have debt — this is the big one. If you’re lucky enough to have paid off your mortgage, car loans and credit card payments, you really don’t need a credit life insurance policy! You’ll simply be throwing your money into a policy that won’t do anything for you.

Which Life Insurance Do I Need?

Your insurance needs depend on a number of factors, including your financial status and your loved ones. The right life insurance for seniors is probably going to be much different than the right life insurance policy for a 30-year-old who just married. The best thing you can do is review your options. If you think credit life insurance might benefit you, don’t hesitate to ask for more information when you take out your next loan.