How Can I Protect My Mortgage, Loan, Line of Credit, or Credit Card Payments?

Maintaining your financial stability is about more than keeping up with your loan, line of credit, mortgage, or credit card payments. Choosing the right protection, such as creditor insurance, to help safeguard against life’s unexpected turns is crucial, too. By exploring your options, you empower yourself to make informed decisions tailored to your unique situation.

Taking on a mortgage, loan, line of credit, or credit card is an exciting step—it means you’re accessing the funds you need. However, it also comes with the responsibility of repayment.

Now, imagine if something unforeseen happened, making it difficult for you to meet those financial obligations. This is where creditor insurance comes in, which can help provide a safety net for you and/or your family when you are unable to work due to illness or injury, or in the event of your death. Let’s break down what creditor insurance is, how it works, and whether it’s right for you.

Key takeaways

• Creditor insurance (sometimes referred to as “creditor protection”) is an optional coverage that may help to pay off or pay down your debt payments if you become injured, ill, lose your job, or if you pass away.
• Creditor insurance includes mortgage protection insurance, loan and line of credit protection insurance, and credit card balance protection insurance. The benefits are non-taxable and go directly to your lender, to be applied to your debt.

It’s easy to apply for and it will not affect any other insurance policies you might have.

What is creditor insurance?

Think of creditor insurance as an optional safety net for your financial obligations that can help protect you and your loved ones. Creditor insurance is designed to help reduce or cover your debts or monthly payments if anything unexpected occurs—such as an injury, critical illness, or even death. The benefits are paid directly toward your credit obligations, are non-taxable, and won’t affect any other insurance policies you might have. Banks and lenders typically offer this type of insurance under various categories, such as mortgage protection insurance, loan and line of credit protection insurance, and credit card balance protection insurance.

Types of creditor insurance

Let’s break down the different types of creditor insurance available—mortgage protection, loan and line of credit protection, and credit card balance protection—each one designed to support you in various financial scenarios.

Mortgage protection insurance

Consider how reassuring it would be to know your home is safe if you were to encounter an unexpected event. That’s what mortgage protection insurance is all about. If you ever face illness, injury, or death, this insurance can help ensure your mortgage payments are still covered. Here’s a look at the different options to help keep your home protected.

• Life coverage: This coverage pays off or reduces your mortgage balance to a certain limit if you pass away.
• Critical illness coverage: If diagnosed with a covered critical illness, such as a stroke, heart attack, or a life-threatening cancer, this coverage provides a lump-sum payment to reduce or pay off your mortgage.
• Disability coverage: Should you become disabled and unable to work, this insurance helps cover your regular mortgage payments and can help provide financial stability during recovery.

Loan and line of credit protection insurance

Loan and line of credit insurance can help ensure that your personal loans and/or lines of credit are covered when unexpected events occur. This type of insurance can assist with your loan payments if you experience a disabling illness or injury, a critical illness, or pass away. It provides various coverage options to protect your lines of credit and loans, helping to ensure that your family or loved ones are not burdened with your financial obligations during challenging times. There are three types of loan and line of credit insurance to choose from.

• Life coverage: This insurance can pay down or pay off the balance of insured loans or lines of credit if you pass away.
• Critical illness coverage: If diagnosed with a covered critical illness (stroke, heart attack, or life-threatening cancer), this insurance helps pay off or reduce the balance of your insured loans or lines of credit.
• Disability coverage: If an injury or illness leaves you disabled and unable to work, this insurance can help to ensure your regular loan and line of credit payments are made for a specific amount of time or until you can work again. While it usually doesn’t pay off the entire balance, it helps manage payments during recovery or for a specified period.

Credit card balance protection insurance

If you lose your job, become disabled, or pass away, credit card balance protection insurance may help reduce or cover your credit card balance. It’s typically bundled into one simplified product that can provide lump-sum or monthly benefits payments to your credit card account, helping to ensure you’re supported during difficult times.

Benefits of creditor insurance

Creditor insurance has several advantages that make managing your financial obligations easier and more secure. Here’s what you can expect.

• Simple application: The sign-up process is usually quick and easy, and most people get approved after answering just a few health-related questions. No health-related questions are asked for credit card balance protection insurance.
• Convenient payments: No need to worry about separate bills. Premiums are easily added to your regular mortgage or loan payments. Credit card balance protection insurance premiums are automatically added as a separate line item on your credit card statement.
• Direct benefits: When the time comes, the benefits go straight to your lender and are applied directly to your outstanding balance.
• Flexible premiums: For credit card balance protection or line of credit insurance, premiums are based on your account balance, so they fluctuate with your debt level.
• Customizable mortgage and loan protection coverage: You can tailor your coverage by combining or bundling life insurance with disability or critical illness coverage, allowing you to create a plan to fit your and your family’s needs.

Is creditor insurance right for you?

Everyone’s insurance needs are unique, so it’s crucial to understand how creditor insurance fits into your overall financial strategy. If you don’t already have life insurance, creditor insurance can be a game-changer, helping to ensure your loved ones aren’t burdened with debt if something happens to you. Even if you already have life insurance, it may not provide you with enough coverage to pay your financial obligations, should the unexpected happen. It’s also vital to regularly review your insurance needs as your life changes, ensuring you always have the right coverage.

How to get creditor insurance

If creditor insurance sounds like a good fit for you, applying is simple. Most banks and lenders offer it when you take out a mortgage, loan, line of credit, or credit card. You can also apply later, if you decide you need it. And, if your situation changes, you can cancel the insurance anytime.

Creditor insurance can offer a valuable layer of protection, helping to ensure your financial obligations are covered, even when unexpected challenges arise. By exploring your options, you can make an informed choice that supports your financial needs. Call 1-800-769-2523 to speak with a representative and explore RBC’s mortgage, loan, and line of credit protection options. And call 1-800-769-2512 to inquire about credit card balance protection insurance.

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