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Is creditor required to offer Death benefits on installment loan

Birdman7
Super Contributor

Is creditor required to offer Death benefits on installment loan

Typically on a installment loan, the form has a place to add disability insurance or death insurance. A friend had a creditor tell him US Bank did not provide that. It causes me to wonder whether that is a standardized form or whether a creditor is required to offer that or, if not, what the best method to obtain it would be.
-Scoring wisdom: General Scoring Primer, Payment History, Amount of Debt, Length of History/New Credit, Mix/Disputes/Freezes/Searches, Mortgage Scores/Negative Reason Codes/V.9, Helpful Links,
CassieCard’s Reason Statements Thread,
iv's friendly statement to reason statement concordance,

ccquest’s Workbook to calculate metrics.
Clean/Thick/Mature/No New Revolver - 8,9; Clean/Thick/Mature/No New Account - 5/4/2.
Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.




(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 1 of 5
4 REPLIES 4
rbentley
Established Contributor

Re: Is creditor required to offer Death benefits on installment loan

Credit insurance or death benefits are not legally required.  When offered they almost always involve an additional payment.  It is a predatory product.  If you were really worried about the possible $10,000 balance on a loan or credit card at the time or your death you could more easily cover than with a very cheap term life insurance policy. Many CU offer a minimal life insurance policy for free to customers.  I think I have one for 3K.

Message 2 of 5
Birdman7
Super Contributor

Re: Is creditor required to offer Death benefits on installment loan

@rbently: Thank you for responding good to hear from you again. I’m aware one is not legally required to have said insurance. However, my query is whether or not a creditor is legally required to make it available for purchase to an installment debtor. I’m asking for a friend and your advice may be right on point and exactly what we needed to hear. Thank you.
-Scoring wisdom: General Scoring Primer, Payment History, Amount of Debt, Length of History/New Credit, Mix/Disputes/Freezes/Searches, Mortgage Scores/Negative Reason Codes/V.9, Helpful Links,
CassieCard’s Reason Statements Thread,
iv's friendly statement to reason statement concordance,

ccquest’s Workbook to calculate metrics.
Clean/Thick/Mature/No New Revolver - 8,9; Clean/Thick/Mature/No New Account - 5/4/2.
Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.




(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 3 of 5
rbentley
Established Contributor

Re: Is creditor required to offer Death benefits on installment loan


@Birdman7 wrote:
@rbently: Thank you for responding good to hear from you again. I’m aware one is not legally required to have said insurance. However, my query is whether or not a creditor is legally required to make it available for purchase to an installment debtor. I’m asking for a friend and your advice may be right on point and exactly what we needed to hear. Thank you.

No, there is no legal requirment that a creditor make loan/credit insurance available.  The ones that do offer it because it is an additional profit center for them.  I always decline it.

Message 4 of 5
FinStar
Moderator

Re: Is creditor required to offer Death benefits on installment loan

As mentioned above OP, there is no legal mandate (Federal, State, etc.) that requires financial institutions to participate or offer such a service or benefit. It is an optional product that a variety of FIs have, but not all of them offer it.
Message 5 of 5
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