What do I need to know about credit insurance? How do I know if I need it or not?

You might have been suggested to purchase credit insurance if you have recently taken out a loan, or are in a process of borrowing money or signing up for a credit card,   as well. Credit insurance mainly promises to pay off your loan if you die, lose your job or go into disability.

Keep in mind that there is more than one type of credit insurance policies. Here are some types of credit insurance:

• Credit involuntary unemployment insurance: This credit insurance simply does what it says. It will pay off the rest of your loan if you involuntarily become unemployed. You might become unemployed because of a lay-off or strike. However, keep in mind that this coverage will only pay your minimum loan payment for a limited time period.

• Credit life insurance: This will pay off your debt on a specific loan or credit line if you pass away before you are able to pay off the loan.

• Credit property insurance: If you decided to purchase property by using the property as collateral for a loan, or if you purchased property with a loan or a credit line.

• Credit disability insurance: If you become disabled and turn out to be unemployed, this coverage will pay the minimum loan payments for a limited time.

Many consumers avoid purchasing credit insurance simply because they either don't have enough information to make a proper and educated decision or mainly because they choose not to spend money on coverage that they believe isn't going to do them any good later on.

What they don't know is that credit insurance is a great investment if they are borrowing loans or have to pay off credit cards.

Here are the basics of credit insurance:

• Credit insurance will cover your loan payment or credit card bill if you lose your job or die and won't be able to make the payments.

• "Single-premium credit insurance' will get you financed with your loan when you purchase a new car or new furniture.

• Credit card companies will usually offer credit insurance in a certain package that will probably include disability insurance, and credit life insurance.