Dec 04
Should anyone buy credit insurance?
As a follow up from yesterday’s article about credit card insurance, I received a comment about whether anyone should buy it.
The people who may want to consider purchasing it are the people that can’t get it anywhere else. If you have a pre-existing condition that prevents you from getting term life or disability insurance, then credit insurance might be worth considering.
In the article, Dennis O’Brien, president and founder of Coastal Financial Advisors, suggests that people who work in industries where layoffs and temporary unemployment cycles are frequent should consider involuntary unemployment insurance, though he admits it’s not the best option. “If you’re in this type of industry, it’s better to put some money away for the expected periods of unemployment,” he says. ”It’s also a good idea to have a fall-back employment option so you can work elsewhere if this happens frequently.” Similarly, he adds that if your industry has a high rate of disability, the insurance may be worthwhile, but disability insurance is a much better option.
But he and other experts agree that it’s a better idea to self-insure by making a small deposit each month into a savings account to draw on for the minimum payment. After all, it’s better than opting for a plan that may not deliver if you find yourself facing financial challenges in case of disability or unemployment.
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