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What are Credit Life Insurance Benefits?

Credit life insurance is an essential insurance product designed to protect the financial dependants of people with an outstanding loan. With this, if the policyholder or the person who claimed the load passes away before paying off the entire debt, the insurer will pay the remaining amount and ensure the family’s financial stability. 

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What is Credit Life Insurance?

Credit life insurance is a specific type of life insurance that is meant to solely pay off the remaining loans in the event of your unfortunate death. With this plan, your family will not be burdened by your outstanding loans. They can use the benefit amount to pay off their remaining loans like business, student, home, or car loans and live a stress-free life.

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What are the Benefits of Credit Life Insurance?

Here is a list of benefits of buying credit life insurance: 

  • Avoid Family from Loan Burden: In case of your untimely death, your family may be burdened by having to pay off the remaining loans in your absence. With credit life insurance, you can ensure they receive a benefit amount to pay off these loans and debts.

  • Low Premiums: Credit life insurance is available at highly affordable premiums, and similar to term insurance plans, the premiums for these plans increase with age.

  • Tax Saving Benefits: You can claim tax benefits per the prevailing tax laws under the Income Tax Act, 1961.

  • Quick Claim Settlement: Most insurers offer a quick claim settlement in case of the death of the policyholder. This is done when the nominee submits the duly filled claims form along with the required documents soon after the death. 

  • Peace of Mind: With credit life insurance, you can live a peaceful life, knowing that your family will be financially secure from your remaining loans and debts in the event of your untimely death.

Note: Know what is term life policy first and then buy a term plan for your loved ones.

Note: It is suggested to calculate the term plan premium on the term plan calculator online tool by Policybazaar before buying.

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What is a Credit Life Insurance Example?

Let us understand how credit life insurance works with the help of an example:

Suman had requested a home loan along with her husband 5 years ago. Her loan request had been processed and she had been able to buy her home with her husband. 5 years later, she suffered an untimely death, and her husband was burdened by having to pay the entire loan amount by himself. Thankfully, Suman had already bought a credit life insurance, through which her husband could pay off the remaining debt and live a financially stable life. 

What are the Points to Consider Before Buying Credit Life Insurance?

Let us take a look at the points to consider before buying credit life insurance:

  • Protect Your Co-Signees: With credit life insurance in place, if you had opted for the loan with a co-signer, the insurer will payout the benefit amount, and the co-signer will no longer be responsible for paying off the loan.

  • Does Not Require Medical Exams: A credit life insurance does not require any medical exam, which allows people in poor health conditions to get covered under the plan and protect their family.

  • Helpful if you cannot cover the debt with life insurance sum assured: In case your existing life insurance sum assured is not enough to cover the debt amount, the credit life insurance may help cover the family financially in case of an eventuality.

Wrapping it Up!

Credit life insurance is an insurance product that is essential for every individual with an outstanding loan. You can buy credit life insurance to ensure the financial stability of your loved ones in the event of your untimely demise.

Note: Check out the best term insurance policy in India and choose one that suits your requirements.

Note: You should also check the benefits of term insurance if you are planning to purchase the term insurance plan.

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