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Should I purchase disability insurance with my auto loan?

by Staff Writer 12/1/2010 7:42:56 AM

With all the excitement of driving off the lot in a brand new car, many individuals while sitting in the finance office of the dealership are only half listening when they are asked some pretty important questions. One of the most important questions you will hear if you are listening is if you want to add disability insurance to your car loan.

Disability insurance is very important if you want to keep your car in the case of an accident or illness that results in your disability. You may even have this type of insurance along with your health insurance, but in the majority of cases, it will not cover the new car. The only way to have the new car on your insurance is to have the insurance agent add it to the policy you now have.

What disability insurance does is pay your monthly car loan payments if you are temporary disabled due to an injury or illness. It will also pay off the car loan if you become permanently disabled. This kind of insurance is very important if you do not want to lose your car if you become disabled. On the other hand, you should do some checking before going into that finance office and giving the sales representative your answer to that question.

Instead of heading to the dealership first when you are ready to purchase a new car, you should check out the cost of adding disability insurance to your health insurance policy so you will be prepare to have the coverage you need instead of going through the dealership. You should also compare different insurance quotes from various insurance companies in order to get the best price for this coverage.

When you walk into the finance office and that question is asked, you can answer with confidence. No, I have that covered. Instead of answering yes to the dealership, you should realize that you could get better rates by going through an insurance company. The main reason this is true is that the car dealership is going to get a cut of the money you will be paying for the added insurance as they are like a middleman for the insurance company.

You can actually receive the same insurance on your car loan and even your mortgage via your insurance company. If you are disabled for a short amount of time, the insurance will make the loan payments you are unable to make. If you become totally disabled, the insurance company will pay the remainder of the loan for the car.

This insurance is important if you want to make sure you still have your car if you become disabled permanently or only for a short amount of time.