Can Credit Insurance Simplify Your Probate Case?

In our current economic conditions, getting out of debt can feel hopeless. When you are young, borrowing money feels exhilarating. You look forward to paying off your car loan or home mortgage and living debt free while your savings pile up. In your youthful innocence, you don’t know how hard it is to pay down your debts while keeping up with all your other bills. By contrast, no retired person feels like celebrating when they borrow money. Living on a fixed income is stressful enough even when you don’t have to put a substantial portion of your budget toward debt repayment. It is even more depressing to do the math and think about how old you will be when a loan you took out in retirement matures. Furthermore, does your reverse mortgage mean that your heirs will need to sell your house before your estate can settle and they can receive your inheritance. The resolution to die debt free is almost impossible to keep, since it depends on so many factors outside your control, but there are precautionary measures you can take to prevent your currently outstanding debts from later turning your probate case into a mess. For advice about preparing to leave behind a debt-encumbered estate, contact a Tampa estate planning lawyer.

What Does Credit Insurance Cover?

Credit insurance policies will pay your outstanding loan balance to the borrower if you become unable to pay the loan for a reason covered under the policy. Depending on the policy, it might pay if the borrower dies, suffers financial hardship because of illness, or loses his or her job for reasons outside the borrower’s control, or all of these reasons. The policy might even protect the assets that secure the loan.

A credit insurance policy is connected to a specific debt. If you bought a credit insurance policy to secure your car loan, you cannot use it to pay an unsecured personal loan. If that were all there were to credit insurance, it would still be an unequivocally good investment. Like many types of insurance, though, credit insurance policies carry so many exclusions that it can be difficult and frustrating to get the insurance company. Furthermore, some lenders add credit insurance to loans without the borrowers’ knowledge, mentioning it only in the fine print of the loan agreement. This practice is so widespread that the attorneys general of 13 states have filed lawsuits of OneMain Financial, a popular non-bank lender, accusing it of deceptive practices for including credit insurance in its loans without enabling borrowers to benefit from it. Some consumer advocates even consider credit insurance a junk fee. The insurance policy that will do the most to protect your family from your bills is long-term care insurance, not credit insurance.

Contact David Toback About Insurance Decisions in Retirement

A Central Florida estate planning lawyer can help you make wise decisions about buying insurance coverage and taking out loans in retirement.  Contact David Toback in Tampa, Florida to set up a consultation.

Source:

insurance.wa.gov/insurance-resources/credit-insurance/credit-insurance#:~:text=Credit%20insurance%2C%20or%20debt%20cancellation,making%20payments%20on%20your%20behalf