Credit insurance policies are often sold along with home mortgage loans. They promise to cover the mortgage payments in case tragedy strikes the homeowner. Policies are sold to insure against death, disability, or unemployment. Sounds too good to be true, right? IT IS –> READ ON TO FIND OUT WHY!

Single Premium Credit Insurance is overpriced when compared to term life insurance. A typical 5-year credit life policy costs over $5,000 more than a comparable a term life insurance policy of 10-years.

Predatory lenders often push a form of credit insurance called "single premium", where the entire cost of the insurance policy is charged up front and added into the loan amount. Consumer’s Union has called single premium credit insurance 'The Nations Worst Insurance Rip-Off', because:

• Single premium credit insurance is one of the most expensive types of insurance sold. The sales agent gets as much as 40% of your premium.


• Credit insurance doesn’t insure the full term of the loan! It usually covers only the first 3-5 years of the loan, even though your mortgage may be for 30 years!


• With single premium, you could pay interest for 30 yrs on an insurance policy that lasts for only 5 yrs!


• Fraud and abuse are common. You may not know you have single premium credit insurance, because lenders who sell this product often don’t give you a choice of a loan with it or without it. They also don’t tell you that the policy is only for 3-5 years, instead of the full loan term. They may imply or state that you have to take the insurance to improve your chances of getting the loan!


• Difficult to collect on claims. Credit insurance policies often contain legal fine print which make it difficult for homeowners to collect on claims. In many states, credit insurance ranks near the bottom of all insurance products in the percentage of premiums that are paid back out to satisfy homeowner claims.

If you want an insurance policy, term life insurance is a good alternative. Term life insurance costs less and covers more. Another option is credit life insurance that you can pay in monthly installments–instead of a single lump sum. This way you don’t pay interest on the insurance for the life of the loan–often 30 years!

For many of us, the equity in our homes is the only financial asset we own. When a home mortgage loan is packed with single premium credit insurance, the homeowner’s equity is being stripped away and the cost of the loan is increased. In the worst cases, homeowners are left with loans they can’t afford and end up losing their homes. Reputable lenders do not sell single premium credit insurance. If a lender tries to sell it to you, the chances are that they are also trying to take advantage of you in other ways. Only a handful of lenders sell single premium credit insurance. Stay away from them! ACORN Housing can help you get a good loan from a good lender.