In the financial services industry, it is widely known that credit life insurance pays off the outstanding loan balance to which it is attached. But have you ever really realized how credit insurance is a key component in serving American households who may have no life insurance at all—that is, up until the point where you, the lender, offer it. According to LIMRA’s 2016 Life Insurance Ownership Study, 37 million households don’t own any life insurance coverage whatsoever. In addition, more than 10% of all U.S. Households said they would have trouble covering everyday living expenses after several months if the primary wage earner died. I think it would be safe to assume that the primary wage earner was definitely the borrower or co-borrower on their existing loans.

When life insurance is sold in a more traditional format, the first step is to determine what the individual’s needs are with the first question usually being “what are your outstanding loans?” Most often, the mortgage is first, closely followed by auto loans, home equity loans, credit card balances, and perhaps any personal loans. Hopefully, the following is no surprise to you—these are all loan types, with the exception of first mortgages, to which credit insurance can be added at the time the loan is originated!

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