Best Life Insurance!

Is it better to get a term policy than disability policy with my car loan?

by Anita Johnston on 01/03/2011 08:39 AM

Trying to decide between a term policy and a disability policy can be very difficult task that really depends on what you can afford and what you really need. A term policy often referred to as credit life will pay off your car loan in the case of your death. Disability insurance will pay your car loan payments for temporary disability and will pay off the loan for total disability.

Okay, now you must figure out which one or both of these you desire. If you can afford both coverage’s that is excellent. On the other hand, if you cannot afford both you need to do some research. You really need this answer before going to purchase a new car, as this question will be asked when you get ready to sign the contract agreement to purchase the new auto.

The best way to learn more about these types of insurance and their cost is by comparing quotes from your insurance company as well as others in your area. You may learn that you have enough life insurance to cover the car loan in the case of your death. If this is the case, then you should consider adding the car loan to your health or disability insurance. Your insurance agent will be able to give you a quote for adding the new car to your policy. By using an insurance company instead of the dealership, you can find many different options as well as being less expensive.

NO matter if you can afford both or know which one you desire, you should not go over this with the car dealership. The dealership is not an insurance company and will charge some times hundreds of dollars more for the same protection.

On the other hand, if you do not have enough life insurance to cover the car loan and you cannot afford both types of coverage you will need to weigh your options. If you are in good health, have no health issues, and no family history of medical problems, you may wish to forget the credit life policy and go with the disability policy. This way in the case of an accident or injury that has left you disabled if only for a short period of time, you will not have to worry about car payments.

One thing to remember is that most car loans are only five years, if you are still young; you will more than likely out live the term of the car loan. Yes, accidents happen, but in most cases, the disability policy will protect you in the case of an accident in which you were injured and disabled. The choice is yours and it can be a very difficult one to choose, but if you weigh the benefits and the probability of both scenarios, you will be able to make a better decision. Your insurance agent will also be able to provide you with statistics that may help you make the best decision.