Life insurance, what a glorious product. Which one do you choose?
Sadly, we can’t make that decision for you. What we can do is provide information on some policies to shore up any confusion between the two. In today’s blog, we will discuss credit life and term life insurance and the differences between the two. It is our hope and goal that this information, however tedious, will be informative to you and your loved ones. So, without further ado, let’s begin.
What is credit life insurance?
We’re so glad you asked. Credit life insurance is a life insurance policy designed to pay off a borrower’s debt if that borrower dies. The face value of a credit life insurance policy decreases proportionately with an outstanding loan amount as the loan is paid off over time until both reach zero. Sounds fun, right? Credit life insurance can also protect a person’s dependents and in some instances, credit life insurance can be required by some lenders. That being said, be sure and thoroughly investigate the fine print of any loan agreement just to be sure credit life insurance is not required.
Switching gears a little bit, we’ll now tackle term life insurance.
Term life is simple; it’s a life insurance with a limited coverage period, or term. Once that “term” is up, it is up to the policy holder to decide if he/she wants to renew the policy or let the coverage end. Typically, some characteristics of term life insurance are as follows: usually renewable, no cash value, and low cost. Unlike credit life, the value of the term life insurance will not decrease over time.
When it comes to making a decision about what life insurance product is best, information is key.
While we only discussed credit life and term life insurance in today’s blog, we do offer other additional life insurance policies. Here at Ramey King, we would be happy to sit down and discuss your needs and the needs of your family to help you make an informed decision.
*Thanks to Investopedia.com for helping with difficult definitions of policies.