Credit Insurance: How It Works and Why You May Need It

Credit insurance, also known as “credit default” or “debt protection,” is a type of coverage that can help protect your assets in case you’re unable to pay off your debts. If you’re not sure whether this type of policy is right for you, here are some things to keep in mind:

  1. What credit insurance does
  2. Who needs it?
  3. How much does it cost?

How Does Credit Insurance Work?

As the owner of any debt, you can buy credit insurance to cover your payments if, for some reason, you experience financial hardship and are unable to pay off what you owe.

This type of protection is usually bought in increments of six months. Thus, it’s crucial not to miss two consecutive payments within any given 12-month period, as the company may not provide you with insurance for future payments, and your policy could be canceled.

Who Needs Credit Insurance?

The list of people who would benefit from credit insurance is quite extensive. Some examples include those living on a fixed or limited income, like:

Retirees
Small business owners whose incomes fluctuate based on their level of sales
Individuals looking to purchase a home
How Much Does Credit Insurance Cost?

The cost of credit insurance varies depending on the company you go through and other factors like your age and credit score. Generally speaking, though, expect to pay around $15-$30 per month for this type of coverage.

Conclusion

Purchasing credit insurance for your business attracts numerous benefits. In case of any unforeseen circumstances, it guarantees timely debt repayment without ruining your credit score. Credit insurance is a valuable investment for business owners and can be customized to fit each company’s unique needs.

Don’t forget to weigh all of your options when making pivotal decisions for or against credit insurance. If you’re still unsure about what this type of policy entails, be sure to consult with an insurance agent before making a final decision.