CREDIT INSURANCE PROTECTS HOME LOANS

Credit insurance can protect repayment of second mortgage and home equity loans. When used this way it is usually offered as a single premium product. This means the insurance premium is paid in full and financed in the loan transaction.

Some credit insurance industry critics say single premium credit insurance cuts into home equity. They are wrong. It protects all the equity in a home.

Credit insurance on a mortgage loan protects the largest asset most consumers have - their homes. State and federal laws require many disclosures to consumers about credit insurance coverage of home equity loans including costs and length of coverage.

Well over 90 percent of second mortgage and home equity loans are retired, paid off or replaced within five years even though they are issued for longer periods up to 30 years. That's why single premium credit insurance on home borrowing is almost always issued as a truncated policy, covering the first five years of the loan. Truncated coverage assures home loan protection during those crucial first five years and that keeps the premium cost down for homeowners.

When a consumer retires or refinances a home-secured loan,. any unused credit insurance premium is returned to the homeowner.

Over the life of a loan, credit insurance is no more or less a reducer of equity than any other product, service, or obligation that is paid for by borrowing against home equity over the life of a loan - whether the amount borrowed is used to pay for home repairs, education, debt consolidation, or credit insurance that protects all the equity in a home.