Credit Life Insurance In Nigeria

Insurance is the most effective approach to protect against the devastating consequences of an unexpected incident. As a result, there are several insurance policies available to cover all aspects of human life.

Credit However, life insurance is an unusual phenomenon. Unlike other plans, which often cover property damage or loss, this one covers bills.

What is Credit Life Insurance?

Credit life insurance is one sort of life insurance coverage. It exists solely to cover a deceased borrower’s outstanding debts upon his death.

After his death, they activate the policy. Thus, the lower the original value of a credit life insurance policy, the lower the outstanding debt balance. This happens over time in a proportional manner until both numbers reach zero.

Why should I choose Credit Life Insurance?

In our current world, to avoid living a credit and debt-driven life is almost impossible.

Therefore, it is only appropriate to protect one’s loved ones from the financial struggles that might ensue after one’s demise.

• Credit life insurance guarantees a cover for whatever outstanding debts you might have, should in case anything happen to you. This is not exclusive to death, it equally applies disability, loss of job, terminal illness, etc.
• Apart from this, Credit Life Insurance is a voluntary policy that, by nature, requires less stringent processes. It also does not require Medical exams or screenings.
• Consequently, Credit Life Insurance is the best way to ensure you get your debts/loans paid. They also make it available on almost all types of loans. Such loans as; Education Loans, Secured Loans, Unsecured (Check-off) Loans, Special Scheme Loans, Investment Group Loans, and Asset Finance.

What are the types of Credit Life Insurance?

Credit Life Insurance comes in two major policies, which includes;

• The Single Life Policy

The Single Life Insurance is an individual policy. In other words, it covers only one person. When such a person dies, it pays the insured value out during the provided length of time the policy covers. In some other cases, subject to the terms of the existing insurance, you can make a claim..

• The Joint Life Policy

The Joint Life Insurance can cover two or more persons. Spouses or business partners often use this policy. They usually base it on a “first to die” rule. Where one partner dies during the subsistence of the policy, they would pay the insured value out. Thus, bringing the policy to an end.

How does Credit Life Insurance work?

Basically, the typical policy provides a loan lender the guarantee of obtaining his money if the borrower dies. They do this by a premium payment, usually on a monthly basis, by the borrower. Once the borrower pays off, they transfer legal title of the loan property to the borrower’s beneficiaries.

Credit Life Insurance usually covers mortgaged properties, car loans or credit lines. Its salient features include; Death, Total or Permanent Disability, Critical Illness, and Retrenchment/Loss of Income as earlier mentioned Credit life insurance is sometimes a requirement by certain lenders, although they are by choice.

What are the Benefits of Credit Life Insurance?

The advantages of Credit Life Insurance include:

• It serves as a protection to a borrower and his beneficiaries in the event of an unexpected sad occurrence.
• A spouse or partner who was a co-signer in a loan agreement is protected from taking the loan liabilities.
• Credit life insurance equally protects a lender from losing his money because of unforeseen circumstances.
• Credit life insurance is a voluntary policy.
• Usually, coverage exclusion issues are rare.

What are the downsides of Credit Life Insurance?

• Credit life insurance costs more than traditional/term life insurance.
• There is a possibility that the credit value of the policy does not cover the entire loan/debt

Conclusion

Credit life insurance is one of the most effective and unusual insurance policies. This is because they allow for three-way traffic. Protection for the lender, the borrower, and a third party (beneficiaries).