2 other ways to get coverage

1. Through your employer if they offer a group insuranceGroup insurance Insurance for a group, such as people who work for the same company, or belong…+ read full definition plan
2. By buying creditor insuranceCreditor insurance Insurance that you can get on most types of debt, including your mortgage, line of…+ read full definition when you apply for a loanLoan An agreement to borrow money for a set period of time. You agree to pay…+ read full definition, mortgageMortgage A loan that you get to pay for a home or other property. Often the…+ read full definition, line-of-credit or credit card

1. Employer life, disability and health insurance

You or your spouse may have group insurance coverage through an employer that includes life, disability and health insuranceHealth insurance Insurance that covers some or all of your medical bills if you get sick or…+ read full definition. Learn what your coverage provides and consider the following before you buy:

• Disability insuranceDisability insurance Insurance that gives you income in case you get sick or hurt and can’t work.+ read full definition – Group disability plans can be restrictive. You may want to supplement your group coverage with an individual disability policy that tops up any coverage you receive from your group plan or provides the coverage you need if the definition of disability is too limited.
• Life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can…+ read full definition – Life insurance coverage under a group plan is often only equal to your current salary. If this amount is too low for what you need, consider buying optional coverage through your group plan or buying individual coverage.
• Coverage stops when you leave your employer – Having individual coverage ensures you always have some coverage in place. While your work plan may let you transfer some group coverage to an individual policy without a medical exam, this is usually more expensive than qualifying for coverage on your own.

2. Creditor insurance

CreditorCreditor A person or institution that lends money. To borrow from a bank or finance company,…+ read full definition life insurance provides a death benefitDeath benefit Money that your life insurance or savings and pension plan(s) pays to your estate or…+ read full definition to cover repayment of a specific debtDebt Money that you have borrowed. You must repay the loan, with interest, by a set…+ read full definition like a mortgage, line of creditLine of credit An account that you set up with a financial institution (often a bank) to borrow…+ read full definition, personal loan or credit card balance. If you or your spouse dies, the insurance pays off the total balance.

Some creditor insurance also makes monthly payments for you if you become disabled, lose your job, or get a critical illness like cancer, heart attack or stroke.

Creditor insurance for major debts is better than no insurance at all. But, in general, buying individual personal insurance to cover your debts will provide you with far greater flexibility and financial security.

3 advantages:

1. Convenient – You sign for it when you take out your mortgage or other loan. And your premium is included in your mortgage or loan payment, so payments are automatic.
2. Can be easy to qualify – If you have no health problems, you simply answer a few questions.
3. Can be inexpensive – Premiums are often lower than for other forms of life insurance because it’s based on a group rate. But if you’re a non-smoker in good health, you may get a cheaper rate on your own.

3 disadvantages:

1. LenderLender Any person or organization that lends money.+ read full definition gets the death benefitBenefit Money, goods, or services that you get from your workplace or from a government program…+ read full definition – The death benefit goes to the lender and the insurance only covers the debt. It doesn’t give your family any other optionsOptions An investment that gives you the right to buy or sell it at a set…+ read full definition for using the money.
2. Benefit decreases over time – The benefit amount drops as the mortgage or loan is repaid. You pay the same amount each month for less coverage over time.
3. Coverage has an end date – Your coverage ends when you pay back the debt. If the insurance is to cover a mortgage, coverage also ends if you sell the house or refinance.

Key point

Choose individual personal insurance coverage over creditor insurance if you can. The disadvantages of creditor insurance often outweigh the advantages.

Caution

Group insurance may not provide the protection you need. Check your workplace coverage carefully and consider supplementing it with an individual policy.