Credit Life "vs" A Short Term Policy On Auto Purch

Hi Everyone,

I just joined today and am getting the feel of my way around here. I was an automobile salesman for 20 years and wanted to share a thought on the Credit Life Policy that you are usually offered at some point during the purchase process.

I know most of us want to make sure that our loved ones are not left with huge mortgage amount on our homes and auto's so we often times purchase credit life insurance on all our major purchases. But in the case of automobiles you may want to consider purchasing a term policy instead. What many people do not realize about credit life ( at least on auto purchases) is that you purchase the policy based on the financed amount of the vehicle. However, as you pay off the finance amount you lose that amount from the payout of your credit life if something was to happen to you.

Example

You finance 20,000 dollar and die with $18,500 left on the finance. Credit Life would pay that amount.

However, let's say nothing happens until you have only 3 payment left for a total of say $900. The Credit Life would only pay that amount.

Whereas if you had purchased a term life policy equal to the amount of premium that you would pay in credit life over the term of the loan you would most likely have purchased at least a $25K policy that would pay 25K until the last payment was made.

Now I am not suggesting that Credit Life is not good for some. I just wanted to suggest that you might want to think about a term policy instead when purchasing an auto.