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When you borrow money, you sign a loan agreement that obligates you to make on-time payments until the loan is repaid in full. If you fail to do so, your loan will go into default. Late or missed payments will likely be reported to the major credit bureaus, which will then appear on your credit report. On average, it can take seven years for a loan default to be removed from your report, and your credit score will take a hit. This could affect your creditworthiness and ability to get credit or borrow money in the future. You may also have to deal with collections procedures. If you used collateral to secure a loan, such as a vehicle, your property can also be repossessed.
Credit insurance may help you avoid these negative consequences. Life is full of surprises, and you never know what could happen to your income. If you were unable to make your loan payments, optional credit insurance could cover them so you could avoid default. Chat with the loan specialists at Lendmark to learn more about credit insurance options.
How could you make payments on your loan if you cannot work? Perhaps you have a long-term disability insurance policy, but did you know that there are stipulations that must be met before you receive any benefits? First, the benefit amount is about 60% of your salary, which usually only covers basic necessities. The elimination period — or waiting period — is typically 90 days, so many people have to rely on savings or a short-term disability policy to get by. Oftentimes, the first disability check is remitted 30 days after the waiting period, so recipients are stuck waiting four months before payment.
You shouldn’t have to worry about repaying your loan obligation if you are unable to work. With credit disability insurance, your loan payments are covered if you become ill or disabled. Have peace of mind knowing you’re protected from having to drain your savings in order to keep your loan payments current. To learn more about credit disability insurance, be sure to speak with a Lendmark loan specialist.
What happens to your loan debt if you should pass away? In short, your assets — also known as your estate — would cover the balance. The process of paying off outstanding debt using finances from the estate is known as probate. The other part of that process is the distribution of your wealth to your heirs. You would probably prefer to give more to your family and friends, rather than your creditors. Additionally, if you co-signed for a loan, then the individual who signed the agreement would be responsible for paying the debt.
If you do not have a term life insurance policy, then you can still protect your estate with credit life insurance. In the event of your death, the loan could be repaid in part or in full without draining your loved ones’ inheritance. The amount of coverage is tailored to the amount that was borrowed, so you don’t have to carry more insurance than you need. You can speak with a specialist at Lendmark to learn more about credit life insurance.