What is Payment Protection Insurance?
Payment Protection Insurance, also known as credit insurance and/or credit protection, provides for repayment of some or all of a loan should something unexpected happen.
Is Payment Protection Insurance required to get a loan?
Payment Protection Insurance is not required for obtaining credit, but if purchased it can be cancelled at any time.
In some states, the lender may require certain Payment Protection Insurance. However, in those cases, the borrower has the right to purchases the coverage from an independent carrier.
What are the major types of Payment Protection Insurance?
- Credit Life
- Provides for payoff of the loan upon the death of the borrower.
- Credit Disability or Accidental and Heath
- Provides for monthly loan payments if the borrower becomes ill or injured and cannot work during the term of coverage.
- Credit Involuntary Unemployment
- Provides for payment of a limited number of monthly loan payments if the borrower loses his/her job due to no fault of their own, such as a layoff, during the term of coverage.
- Credit Property
- Provides for repair or replacement of personal property serving as collateral for the credit obligation if the property is lost, damaged or stolen.
- Single/Dual Interest Auto
- Provides for payment of the creditor’s financial risk (single) or the creditor and borrower’s financial risk (dual) in the event of an insured loss to the vehicle pledged as collateral.