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When applying for a mortgage or a loan, or to lease a vehicle, the institution usually asks if you want
to insure the loan with life insurance, critical illness insurance, or disability insurance.
Because you are applying for Credit, this is called Creditor Insurance.

How is it different from personal insurance?

Creditor insurance is a form of group insurance. Rates are usually based on five year age bands, not your actual age.
non-smokers pay the same rates as smokers.
The insurance only pays an amount equal to your remaining loan balance.
The financial institution which loans you the money owns the insurance contract.
The beneficiary is the financial institution.
The insurance can be cancelled at any time by the institution.
The rates for the insurance are subject to change.
Your eligibility for the insurance is determined at the time of claim.
The contract can include exclusions or conditions which will disqualify you from coverage, even though you are paying for the insurance.
Refinancing or transferring your loan can invalidate the existing insurance.

Is Creditor Insurance Cheaper than Personal Insurance?

Creditor Insurance is decreasing temporary insurance.
You pay the same price even though the amount of insurance decreases with your loan balance.
You cannot convert or renew the insurance to a plan which will last longer than the original loan.
Non-smokers pay the same rates as smokers.
The insurance can be cancelled at any time without your consent.
There are exclusions and conditions which may invalidate your insurance.
You cannot transfer the coverage to another loan or institution.
Personal Insurance is cheaper because the benefit does not decrease.
The policy cannot be cancelled by the company.
You can renew or extend the insurance coverage.
The rate you are charged is based on your personal age and lifestyle and is guaranteed.
Your coverage can be transferred to a new or refinanced loan or mortgage.
The full amount of the insurance is paid to your choice of beneficiary.
The beneficiary decides how much of the money should be used to pay down the loan.
If your beneficiary is a 'preferred beneficiary' the insurance may be creditor proof and not subject to seizure.
The insurance benefit is tax free.

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The information provided on this page is for information purposes only, and is not a contract. Actual policy wordings govern in all cases. Policy wordings, terms, and conditions vary from company to company. This description is intended to be generalized. Always consult a lawyer in legal matters. The information provided is subject to change without notice. E.&O.E.

Your Best Insurance Is An Insurance Broker