Mercy Maranga writes content on Finance and Debt Management. Visit her site here for more information on Finance and how to effectively Manage your debts. Debt
Debt insurance refers to a type of insurance that is sold to an individual to cover him or her when ill and unable to service a loan. When one has this type of insurance and takes a loan, the insurance company will pay his or her repayments for a specific period of time. Often it is for 12 months. The period of cover may vary depending on the insurance company.
Most credit companies convince clients to buy this type of insurance so that they can cover their payments if they become ill or are declared bankrupt. Some people view this kind of insurance as a way for credit companies to make huge and unfair profits.
When one decides to go for debt insurance, it is prudent to buy separately insurance against sickness. Insurance against sickness is like permanent health insurance. The two policies, that is, insurance against sickness and insurance against a debt are important. The former will cover one’s medical bills when he or she is sick. The latter on the other hand will cover an individual’s credit bill when ill and is therefore unable to go to work. A person who is unable to go to work due to sickness may have a hard time serving a loan or loans.
The other incentive for one to have both permanent health insurance and debt insurance is that with permanent health insurance, one is insured for incase he or she is sick and therefore unable to work. This therefore gives one a piece of mind that the creditor cannot come to auction his or her household assets to recover their money.
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