What is Creditor's Insurance?
Creditor's Insurance, also called (credit insurance or creditors group insurance) pays off an outstanding credit balance or makes/postpones debt payments on the customer's behalf in the event of death, disability, job loss or critical illness. Creditor's Insurance provides individuals and families with peace of mind that debts will not become a burden if unexpected events should occur. For example, Creditor's Insurance on a mortgage will pay off the debt in full if the income earner dies, thus ensuring that the surviving family members do not lose their home.
Customer benefits of Creditor's Insurance
- Fulfills a need - If a customer is unable to make their payments for reasons such as death, disability or job loss, the insurance helps ensure that the loan stays in good standing; credit rating is protected, and in the event of the death of the insured, the debt is paid off.
- Convenient - Creditor's Insurance is offered alongside the loan or mortgage product making it inherently timely and convenient. Premiums for Creditor's Insurance can be included with the debt payment. The claims process is simple and straightforward. The customer always has the freedom to purchase or decline Creditor Insurance.
- Quick and Easy Purchase - The purchase process is simple with most customers automatically approved for coverage without medical tests and detailed health questionnaires. Creditor's Insurance accepts a large majority of applicants. Even those with a medical condition typically need only wait a short time before being eligible to claim benefits for an existing condition.
- Review Period - All Creditor's Insurance products include a review or trial period enabling customers to give their choice due consideration and be eligible for a premium refund. Coverage can be cancelled at any time later.
- Accessibility - Individuals and small businesses have convenient access to Creditor's Insurance through thousands of bank branches or by telephone. Creditor's Insurance distribution offers extensive geographic availability to consumers making insurance more accessible in small towns and remote areas. Creditor's Insurance enables access to protection for all Canadians.
- Underserved markets - Lower and middle income consumers have not been well served by the "traditional" insurance industry since small value policies are not economical to distribute with traditional life insurance sales processes. The average term policy has increased dramatically in recent years to an average value of $340,000. However the need & interest in life insurance is highest among households with low income and few investable assets to fall back on and who want to purchase smaller amounts of insurance. Banks conveniently offer mortgage creditor insurance through trained, salaried staff at over 5,000 branches in Canada as well as over the phone by qualified staff. For many Canadians, Creditor's Insurance is their only real option.
- Affordability - Creditor's Insurance enables customers to obtain smaller amounts of coverage at affordable insurance premiums. Creditor's Insurance can also be put in place for a short duration to match the term of the loan.
Creditor's Insurance provides Canadians with an opportunity to buy protection that they might not otherwise have. No substitute is available to meet customer needs for access, affordability and ease from a trusted financial institution.