Credit insurance is the purchase of an insurance policy that protects against non-payment or default on credit. Credit Insurance is often advertised as being able to protect companies from being unable to meet financial obligations. These obligations result from bad debt, late payments, defaults on existing contracts, bankruptcy, or even cash flow problems. Besides, the insurance policy is designed to provide a lump-sum amount in case of death or dismemberment.
The best way to find out if insurance has been included in your policy or an extra charge being levied by your insurer without your knowledge is to read the policy document. By reading the paper, you will know what is covered by your insurer and what is not. If any extra charge has been levied without your knowledge, you will also learn about it by reading the policy document. Check more info about Loan Protection Insurance Refund here.
This is a common problem many insurance companies are facing. Some insurers list credit Insurance under the other coverages category. Others may show coverage without ever having purchased it or not even offering it at all. So what can you do?
The first thing you need is to have access to your insurance policy or certificates so you can find out what coverage is in place. You should be able to see what type of policy it is, which would indicate whether Credit Insurance was purchased or not. If the policy lists credit Insurance, the next step would be to check when it was purchased.
If it was purchased before the loan, you should know immediately. If it was unintentionally included, the lender will not accept the default risk on the property. If, however, credit insurance was purchased after your loan closing, that indicates that this coverage was probably intended for purchase by someone other than yourself.
Lenders should be the only ones to purchase this coverage since they take on all the risk. If you find out that credit Insurance was added after your loan, it should immediately be removed. No one wants to pay for something they did not ask for or need.
If you still want the coverage, call your insurance agent and request a new policy that will cover the problem. Of course, if you do decide to remove credit Insurance from your policy after it was already added, make sure your loan is downgraded to a VA ARM. It should lower your payments since this option has a more significant interest rate subsidy built into it.