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Payment Protection Insurance includes two types of insurance - and . Credit Life Insurance is designed to payoff the insured balance of your loan if you die during the term of the loan. Joint Credit Life is available as well. Under a Joint Credit Life policy, if you or your co-borrower were to die, the loan would be paid up to the contract limits. Credit Disability Insurance is designed to pay your loan payments (up to the contract limit) if you become ill or disabled and unable to work at any time during the term of the loan.
Payment Protection is optional and is available on installment loans, lines of credit, mortgage loans and credit card loans.
This insurance protects your family's financial security and your credit rating by ensuring your loan will not end up in default in the event of your disability or death.
Payment Protection also tends to be easy to apply for and affordable. Its rates are established by each state and generally result in reasonable, monthly premiums. Rates vary from state to state and the actual cost of your particular coverage depends on where you live, your loan amount, and the coverage selected. Your credit union has specific rate information. Applying for Payment Protection is easy and usually done at the time of the loan application. If you have a co-borrower on the loan, Payment Protection is available to both you and your co-borrower. Your premium is included with your monthly loan payment.
If you already have life and disability insurance through your job, Payment Protection may be an effective way to supplement the other insurance you carry. Disability coverage through work is often not enough. Employee benefit specialists say that most short-term benefit plans only cover 60% of take-home pay for up to six months. (Check with your employer to determine if you have any current short-term or long-term disability benefits.)
Likewise, while Social Security provides long-term disability benefits, these benefits don't begin for six months and are capped at a portion of normal take-home pay. That's why bills could begin to pile up as you try to regain your health and earning capacity after a disability.
Additionally, many experts recommend carrying an amount of life insurance equal to five to seven times your annual salary. If you are uninsured or under insured, as many consumers are, Payment Protection insurance makes sense to ensure that your debts can be repaid.
Not everyone needs Payment Protection and only you can determine whether you have enough insurance coverage to protect your family. Ask your credit union about Payment Protection Insurance to learn more about their offering.
For general questions about Payment Protection Insurance, please contact 720.974.1360.
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