Should you buy debt insurance from your loan company or should you shop around for a better deal?
Credit companies will often try and sell you debt insurance to cover your payments if you become ill or are made redundant. Unfortunately these policies are often used as a way for the credit company to make a lot of money and are very bad value.
Debt Insurance - What is it?
The debt insurance (or repayment cover) that is sold to you when you take out a loan will pay your repayments for a specific period of time (often only 12 months) if you are ill or (for some policies) if you are made redundant.
Debt Insurance - Should You Use It?
Credit companies should not make taking on the debt insurance a condition of offering you credit. You will frequently find that it is a better idea to buy insurance against sickness (permanent health insurance) separately. Prices are far more competitive and you will also be able to insure yourself for an amount that will help you to live - not just to pay your credit bills! The other advantage with permanent health insurance is that it normally insures you for as long as you are unable to work, whereas debt insurance will often only pay you for a set period - typically 12 months.
Be aware that you may be subjected to high-pressure sales tactics on these sorts of insurance policies as staff at loan companies may be targeted to sell a certain number of policies.
The other problem with debt insurance premiums is that they are frequently added as a one-off charge at the start of the loan that you then pay interest on for the duration of the loan.
Debt Can Be a Positive Or Negative Force - Which is it For You?
Everyone is now saying that debt is a bad thing. Is it that simple?
Will You Be Prosecuted For Debt Fraud?
If you have debt problems you may be worried about being prosecuted. Fortunately this is very unlikely.
If You Have Money Worries Then Confront Them Head-On
Don't delay in dealing with your money worries. Tackle them today.
