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There are various life insurance plans out there, and each one is designed to help your loved ones recover in the event of a serious loss. However, credit life insurance exists to help pay off any outstanding debt.1
The face value of life insurance is the dollar amount equated to the worth of your plan.2 Usually, the face value in a credit life insurance plan decreases over time at the same rate as the debt is being paid off until both values eventually reach zero.3 Essentially, having credit life insurance means that you may be able to eliminate debt from you and your loved ones’ lives entirely.
Credit life insurance might be particularly helpful if a loved one or family member co-signed with you on a loan or mortgage. If you were to pass suddenly, there would be a plan in place to protect them from having to pay off the debt on their own.4
Aflac doesn’t offer credit life insurance, but we have two other plans that may fit your needs for life insurance coverage. Term life insurance provides coverage for a certain period and is an excellent choice for those looking to save money upfront. On the other hand, whole life insurance is a greater financial investment, but you are protected for your entire life.
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
The primary coverage benefit of credit life insurance is the protection it allows joint borrowers. These plans help ensure that one person is not left to cover the outstanding debt after the other joint borrower passes.5
For example, let’s say you and your partner sign an auto loan together, and the policyholder passes away. Credit life insurance protects your partner from paying off the remaining amount on their own.
In some cases, credit life insurance policies can be written into the loan you are getting.6 However, it is illegal for an entity to require credit life insurance in a loan, so it isn't required to have credit life insurance for a loan.7
Usually, there is no medical exam or fewer health regulations in credit life insurance because these plans have less scrutinous underwriting requirements.8
The cost of credit life insurance varies depending on the specific plan and company you are working with. However, if the credit life insurance plan is built into a loan, you can expect the recurring payments to be higher because they coincide with the amount of the loan.9
While we can’t provide you with an exact cost for credit life insurance, you can use our life insurance calculator to get a better idea of what your costs will look like if you choose a whole to term life insurance plan with Aflac. Your life insurance premiums may be impacted by your location, age, coverage goals and the number of dependents in your life.
Credit life insurance is not the only option if you hope to protect your partner from unwanted debt. Term life insurance may be a better solution because the beneficiary usually receives the death benefit tax-free. In addition, term life insurance is usually less expensive than credit life insurance, and you can specify how long you need coverage for.10
Since term life insurance is less costly, you can use the money saved on premiums to help pay off any debt. Depending on the unique situation, there may even be funds left over for other needs.11
Also, whole life insurance may be a good route if you are looking for coverage that lasts your entire life, but it can be more expensive.12 However, the death benefit in whole life insurance types of plans is usually guaranteed, which can help minimize financial stressors for your beneficiary.13
Credit life insurance can be a helpful solution for paying off debt, but we encourage you to explore all your options to find the best life insurance plan for your needs. Aflac offers whole and term life insurance that provide the coverage you need at an affordable price. Chat with an agent and get a quote to discover which life insurance plan is best for your lifestyle.
1 & 3-11 Investopedia. Credit Life Insurance. Updated: July 23, 2023. Accessed: February 15, 2024. https://www.investopedia.com/terms/c/credit_life_insurance.asp.
2 Investopedia. Life Insurance Guide to Policies & Companies. Updated: September 21, 2023. Accessed: February 15, 2024. https://www.investopedia.com/terms/l/lifeinsurance.asp.
12-13 Investopedia-Whole Life Insurance Definition. Updated: September 21, 2023. Accessed: February 15, 2024. https://www.investopedia.com/terms/w/wholelife.asp.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400.65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX.Q60000 series: Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Final Expense insurance coverage is underwritten by Tier One Insurance Company. The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent. Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac does not offer Universal or Variable Universal life insurance.
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