Get-Rich-Quick Schemes = Get-Poor-Quick Realities II
Many lenders require borrowers to get credit life or disability insurance. It protects the lender if the borrower dies or becomes disabled before repaying a loan. For the borrower, however, it’s no bargain. According to the Wall Street Journal, insurers collect over $2 billion a year in premiums, but pay out only $900 million a year.
If a lender wants you to buy this insurance, explain that your other assets or life insurance will cover the loan if you cannot pay. For example, a term life insurance policy that will pay enough to cover the loan, should you die, is much cheaper. If the lender insists, watch your balance carefully and ask your lender to let you drop the insurance when you’ve repaid 25 percent of the loan.
Your thoughts on this subject? Your comments appreciated!
Content © Rich Brott, 2011
