Credit insurance is optional insurance that is meant to pay off money owed in case something happens to the credit owner such as death or disability. Unlike something like car insurance, it is not something an owner must pay for as a requirement, and is even not recommended if the owner is already paying for something such as life insurance. One main reason is that credit insurance tends to cost more.

There are several types of credit insurance. Disability means the lender will be paid if someone has ended up with a disability. They also call this credit accident or health insurance. Life means the lender will be paid what they are owed if the individual passes away. Personal property is for the theft of an item, often happening after insurance is offered by certain stores. Finally, there is involuntary unemployment, which involves continuous payments made by the month if someone loses their job and it isn’t their fault.

Credit insurance is supposed to cover credit card payments or a loan if something happens, but it is not absolutely needed for anything. Potentially, it can cost up to five times more to invest in credit insurance than it does to consider typical life insurance. If a credit card owner is considering this kind of insurance, they should be looking for plenty of options available because of how much the price can vary. Potentially, an individual can have a reasonable price. They should also make sure to ask the right questions when applying such as how much the premium may be, the full extent of what the terms and conditions may be, whether or not the insurance can be canceled and how easy it will be, and whether or not a refund will be issued to the individual if cancelation happens.