Credit Insurance

Like any form of insurance, Credit Insurance , also known as payment protection .is an insurance policy associated with a specific loan or line of credit which pays back some or all of any money owed should certain things happen to the borrower, such as death, disability,  rental , refinance, car loan quote ,or unemployment. Credit Insurance is usually purchased by a company to protect itself against specific losses that could impair the performance of the company.

The sale of credit insurance is controversial because it is almost always cheaper for an individual to forgo credit insurance, and instead have a term life insurance or disability insurance policy to cover the credit balance. The reason is that credit insurance is guaranteed issue, no matter if a person would otherwise be insurable or not. So the rates offered must reflect this, and be worse than if a healthy or otherwise insurable person were to purchase coverage on their own.

In the case of credit insurance, protection is offered to the supplier against the risk of the debtor going into liquidation (Insolvency); delayed or bad non-payment (Protracted Default) and in respect of export risks, the unilateral cancellation of contract (Repudiation) as well as a myriad of Political related risks.