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What
is Credit Life Insurance?
A credit life insurance policy, or "credit life," is used to pay off a debt
-- a loan for car, furniture, electronics, appliances, etc. -- if you die
or are disabled. It is a type of decreasing term life insurance
policy.
It is insurance on a debtor, in favor of a lender. Although they may have
some similar features, it is not the same as mortgage
life insurance.
You may be offered this sort of policy when you are financing a large item.
The premiums are usually added into the loan contract. It is always optional,
and it can be quite expensive. Note that it often illegal for a lender to
require you to buy it.
If you already own a sufficient amount of life insurance to cover your financial
needs, including debt repayment, the purchase of credit life insurance is
normally not advisable due to its relatively high cost.
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