Yeah, I said it- credit life insurance is a scam.
Have you ever bought a car? Or a house? Chances are, sometime during the loan paperwork you were asked if you wanted to purchase credit life insurance. Maybe you bought it because the salesperson was ultra convincing or maybe even used scare tactics- i.e. “Do you really want to leave the burden of paying off your car to your spouse? Especially during such a difficult time?”, blah, blah, blah……
And you think- “Oh crap- maybe I do need to do this.” Point of purchase is big business- regardless of the product. And yes the insurance world seems to thrive on fear as a sales tactic…….
Here’s why I say don’t waste your money on credit life insurance:
- The amount of coverage decreases in direct correlation to your loan (so face amount of policy = loan balance). BUT your premium stays the same the whole time. Hmmm…..you continually get less coverage, but still pay the same amount of money for it. Does that seem like a good deal to you?
- The cost of the credit life is usually included in the loan amount, so not only are you paying interest on your loan, you’re also paying interest on the credit life insurance premium. Hmmm….. do you think this has the potential to jack up the premium? (go ahead- nod your head Yes- that is the correct answer)
- The policy benefits the lender, not you. Right now you might be saying, “Well, I did buy it to pay off my loan after all”- (insert big DUH here). Many people buy credit life thinking it’s like regular life insurance- the money is paid to a beneficiary you’ve named. Nope- credit life pays the lender, not a beneficiary. Might not be important to you, but it’s good to point this out so there are no misunderstandings.
I’ve worked with life insurance since 1996, and could never find a product besides the credit life insurance offered through banks that addressed smaller, short-term loans. And it was discouraging, because I’ve had several customers that had the need and they would ask me if I offered a $10,000 or $20,000 policy to pay off their car loan if something happened to them. And I had to say No.
Say Hello to credit life insurance’s (much more attractive) replacement
Erie Insurance just rolled out a new product that chews up credit life and spits out gold. It’s called LifeSense and is designed to address the need mentioned here- smaller, shorter-term loans. Some of the highlights include:
- No medical exam (yay- no getting stuck with a needle or peeing into a cup)
- Coverage from $10,000 to $90,000
- 5, 10, 15 and 20 year terms available
- Simplified application done via phone (electronic signature available)
- 15 minutes from start to finish
THIS totally blows my skirt up (and believe me, there aren’t too many insurance-related things I can say this about)– I finally have a solution to the many people who I’ve encountered that need the small, shorter-term policy and I”ve had to say NO. Best of all, it’s simple to apply for and very affordable. It’s easy for you, it’s easy for the agent and solves your problem of buying life insurance for a small, short-term loan.
Here’s some Erie LifeSense sample scenarios and premiums:
- 20 year old female, non-tobacco, $10,000 face amount for 5 years- $6.95 a month
- 25 year old male, non-tobacco, $25,000 face amount for 10 years- $8.88 a month
- 35 year old female, tobacco, $50,000 face amount for 15 years- $17.55 a month
- 30 year old male, tobacco, $35,000 face amount for 20 years- $15.06 a month
Although we offer a full range of life insurance products at my place, Alan Galvez Insurance, we’re very excited about this. I think LifeSense is a perfect solution for the majority of Ohio residents looking for simplified, affordable life insurance to cover a small, short-term loan. And you can get it from someone you know and trust. So, if you’re looking for Ohio life insurance, and this sounds like a great solution for your short-term needs, by all means, contact me. It’s quick, simple and no-pressure. I’d love to talk with you.