Difference between revisions of "Credit Insurance"

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== Client problems==
== Client problems==
* Client is being offered, or asked to buy, some form of insurance as part of a credit transaction.
*Client is being offered, or asked to buy, some form of insurance as part of a credit transaction.
* Client thinks they have a claim on an insurance policy with a creditor, but the creditor is refusing to pay.
*Client thinks they have a claim on an insurance policy with a creditor, but the creditor is refusing to pay.
 
 
== Summary of the law==
== Summary of the law==
[[File:Consumer_Law_and_Debt_-_Credit_Insurance.jpg|thumb|275px|right| link=| <span style="font-size:50%;">Image via www.istockphoto.com</span>]]
The principles of insurance law are beyond the scope of this publication. However, there are a few instances where advocates may encounter insurance issues related to consumer transactions, particularly insurance for consumer loans or mortgages.
The principles of insurance law are beyond the scope of this publication. However, there are a few instances where advocates may encounter insurance issues related to consumer transactions, particularly insurance for consumer loans or mortgages.


The first instance is when a consumer asks for advice about an offer for insurance as part of a credit transaction. For example, a consumer may be offered life and disability insurance when they take out a mortgage. The insurance coverage will usually be for an amount up to the value of the amount borrowed, and is designed to provide extra assurance that the obligation will be paid in the event of the borrower’s inability to pay.
The first instance is when a consumer asks for advice about an offer for insurance as part of a credit transaction. For example, a consumer may be offered life and disability insurance when they take out a [[Mortgages and Foreclosure|mortgage]]. The insurance coverage will usually be for an amount up to the value of the amount borrowed, and is designed to provide extra assurance that the obligation will be paid in the event of the borrower’s inability to pay.


While credit insurance may be a prudent thing to have, consumers should be careful to compare the rates and coverage offered through the creditor. The premiums that the consumer is asked to pay by a creditor are often higher than the premiums they could get from the consumer’s existing insurer, or from a new insurer who is not associated with the credit transaction. The consumer may find a better premium elsewhere for the same coverage, or better coverage for the same premium.
While credit insurance may be a prudent thing to have, consumers should be careful to compare the rates and coverage offered through the creditor. The premiums that the consumer is asked to pay by a creditor are often higher than the premiums they could get from the consumer’s existing insurer, or from a new insurer who is not associated with the credit transaction. The consumer may find a better premium elsewhere for the same coverage, or better coverage for the same premium.
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== Related topics and materials==
== Related topics and materials==
See the other sections on borrowing money:
See the other sections on borrowing money:
Types of Lenders and Creditors

* [[Types of Lenders and Creditors]]

Interest and the Cost of Borrowing Money

* [[Interest and the Cost of Borrowing Money]]

Payday Loans

* [[Payday Loans]]

Co-signing, Guarantees and Joint Debts

* [[Co-signing, Guarantees and Joint Debts]]

 
See related topics:
* [[Mortgages and Foreclosure]]


== See related topics: ==
* Mortgages and Foreclosure


{{Consumer and Debt Law Navbox|type = debt}}
{{Consumer and Debt Law Navbox|type = debt}}
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