If you're about to borrow money or make a purchase on credit, watch out for costly insurance that may be included. Credit life, accident and health insurance guarantees your debt will be paid if you die or are injured or disabled and can't work.
In North Carolina, lenders cannot require you to buy most types of credit insurance. But some lenders may imply that credit insurance is necessary for you to get the loan, or they may automatically include the insurance as part of the loan agreement you’re given to sign.
Protect yourself from credit insurance you don’t want or need:
Don’t get pressured into buying credit insurance. Keep in mind that in many cases, the lender makes a profit when they sell you credit insurance.
Many consumers aren’t aware that they’ve purchased credit insurance. Don’t sign or initial a statement saying that you want to buy credit insurance unless you decide you really want it.
Lenders can require credit property insurance on loans secured by a piece of property or possessions that could be destroyed. However, they must give you the option of purchasing insurance from a company you choose.
If you realize after you've signed a loan contract that you purchased credit insurance you didn’t want, you should be able to cancel it and receive a prorated refund.
Before you buy credit insurance, check first to see if your homeowner's or life insurance policy already provides similar coverage.
If you decide you want additional protection for a large loan, a separate term life insurance policy taken out for the same amount as the debt may be a better option.
North Carolina law prohibits the financing of prepaid credit insurance on home loans. A mortgage lender can sell credit insurance on a monthly premium basis, which means that the premium is added to your monthly payment and not prepaid and financed with the loan principal.
We Can Help
If you have a complaint about credit insurance, contact us
toll free within North Carolina at 1-877-5-NO-SCAM.