Is loan protection insurance a good thing?
September 13, 2012 6:42 AM Subscribe
Is credit protection insurance a good idea?
posted by sevenyearlurk to Work & Money (14 answers total) 1 user marked this as a favorite
A credit union has approved me for a debt consolidation loan that I am very happy about (it's a 3-year repayment schedule that will cut the interest I've been paying in half). The total amount of the loan is about 1/3 my annual salary.
The advisor I spoke with talked about 'insurance' on the loan as a standard thing -- I think it covers death, disability, critical illness, and job loss, either paying the debt in full or covering payments depending on the specifics. It seemed expensive -- from the numbers she was quoting, it seemed like it was a ~10% premium on the monthly payments.
I've been thinking about it, and it seems like they're trying to get me to pay to cover their risk. I already have life insurance and critical illness insurance. I have no dependents. The job loss thing seems comforting, but it seems like a lot to pay to cover that risk.
So, is this 'credit protection insurance' a good idea, or just taking advantage?