How do you guys feel about Credit Life Insurance on buying an RV with a loan.
Our's will cost $10.00 per month attached to the note....
Terry and Jo said
02:06 PM Sep 29, 2010
Likely, this will be another "do it/don't do it" topic. So, I will merely try to put a few things in perspective.
If this is one that will pay off the camper upon the death or incapacitation of a borrower, does it apply with either co-signer? (Presuming, of course, that both of you will be signing for the loan.) To my way of thinking, if it would be the desire of BOTH of you to keep the camper if the other spouse passed away, it might very well be beneficial. To be fair, you would need to know the length of the contract in months and multiply the $10 by that number of months to see if it was worth it to you.
If it were a situation that you might not want to keep it if something happened to your husband, then maybe not. In the case of Jo and I, since we will be full-timing in the camper and either of us would elect to continue to live in ours, we might would be interested, PROVIDED that we didn't have life insurance to pay it off. Since we both have fairly high dollar insurance on each of us, we chose to not go with any credit policy.
On the other hand, look at the option of purchasing a term life policy, if one can be had for the price of the credit insurance. If the credit insurance is less than what a term life policy would be, then you may want to go with the credit insurance.
I'll bet that someone else will have other ideas as well. Good luck with it all. I'm excited for the two of you in that you are getting close to having both a truck and trailer, even if it is primarily for camping to start with.
Terry
Howard said
04:25 PM Sep 29, 2010
Credit Life is another product RV and auto dealers sell that has a high profit margin for the dealer. I personally would never buy credit life, and I especially wouldn't finance it.
With that said, your life insurance coverage should be sufficient to pay off the note if something happened to you. If you don't have enough coverage, my bet is that increasing the life insurance coverage would cost less than the credit life.
If you do go with the credit life, be sure to ask the questions Terry posed. And check the coverage to ensure that there are no "weird" exclusions regarding cause of death or anything else that allows them to not pay.
Ckerr said
07:58 PM Sep 29, 2010
As a Realtor people often ask me about the credit life option on their home mortgage. My advice is always along the lines of what Terry and Howard have already said. If you have or can purchase a life insurance policy in an amount sufficient to pay off the rv and take care of any other goals you have for the life insurance, that is always a better way to go. Remember that credit life has by definition a decreasing payout. As your loan amount goes down, the value of your policy goes down. Whereas general life insurance is a stable amount. Say you purchase a $100K life insurance policy. At the point you die, you owe $20K on the rv loan. Your credit life only pays $20K whereas the standard life insurance policy would pay $100K.
Keep in mind that if both of you are on the note and both of your incomes are needed, then each of you need to have sufficient insurance.
One other variable to consider. If you finance your rv purchase through a credit union, they often offer discounts on interest rates for things like purchasing credit life, and automatic payments. That's the case with Johnny's credit union and because of his health issues, it is cheaper for him to purchase credit life on his vehicle loans than to purchase comparable straight life insurance.
Our's will cost $10.00 per month attached to the note....
If this is one that will pay off the camper upon the death or incapacitation of a borrower, does it apply with either co-signer? (Presuming, of course, that both of you will be signing for the loan.) To my way of thinking, if it would be the desire of BOTH of you to keep the camper if the other spouse passed away, it might very well be beneficial. To be fair, you would need to know the length of the contract in months and multiply the $10 by that number of months to see if it was worth it to you.
If it were a situation that you might not want to keep it if something happened to your husband, then maybe not. In the case of Jo and I, since we will be full-timing in the camper and either of us would elect to continue to live in ours, we might would be interested, PROVIDED that we didn't have life insurance to pay it off. Since we both have fairly high dollar insurance on each of us, we chose to not go with any credit policy.
On the other hand, look at the option of purchasing a term life policy, if one can be had for the price of the credit insurance. If the credit insurance is less than what a term life policy would be, then you may want to go with the credit insurance.
I'll bet that someone else will have other ideas as well. Good luck with it all. I'm excited for the two of you in that you are getting close to having both a truck and trailer, even if it is primarily for camping to start with.
Terry
Credit Life is another product RV and auto dealers sell that has a high profit margin for the dealer. I personally would never buy credit life, and I especially wouldn't finance it.
With that said, your life insurance coverage should be sufficient to pay off the note if something happened to you. If you don't have enough coverage, my bet is that increasing the life insurance coverage would cost less than the credit life.
If you do go with the credit life, be sure to ask the questions Terry posed. And check the coverage to ensure that there are no "weird" exclusions regarding cause of death or anything else that allows them to not pay.
As a Realtor people often ask me about the credit life option on their home mortgage. My advice is always along the lines of what Terry and Howard have already said. If you have or can purchase a life insurance policy in an amount sufficient to pay off the rv and take care of any other goals you have for the life insurance, that is always a better way to go. Remember that credit life has by definition a decreasing payout. As your loan amount goes down, the value of your policy goes down. Whereas general life insurance is a stable amount. Say you purchase a $100K life insurance policy. At the point you die, you owe $20K on the rv loan. Your credit life only pays $20K whereas the standard life insurance policy would pay $100K.
Keep in mind that if both of you are on the note and both of your incomes are needed, then each of you need to have sufficient insurance.
One other variable to consider. If you finance your rv purchase through a credit union, they often offer discounts on interest rates for things like purchasing credit life, and automatic payments. That's the case with Johnny's credit union and because of his health issues, it is cheaper for him to purchase credit life on his vehicle loans than to purchase comparable straight life insurance.