You want the best for your family and that very likely includes ensuring that your family is never burdened with debt when the unthinkable occurs, like a disability, illness or sudden death. It's during these times that it can be reassuring to know that your financial obligations are protected. One of the best ways to provide financial security for your family is with a Loan Payment Protection Plan.

Q: What is a Loan Payment Protection Plan?
A:It's an insurance plan designed to ensure that payment obligations are met in the event that your income is reduced or eliminated. This type of insurance is growing in popularity because of its affordability and flexibility.

Q: What types of Payment Protection Plans are available?
A: There are two available: Credit Disability and Credit Life Insurance. Credit Disability insurance makes your loan payments for you so that you are guaranteed not to suffer a financial loss due to loan default if your earnings are interrupted because of a disability. It can insure payment of everything from auto to personal computer loans. Credit Life ensures that your family is not burdened with debt in the event of an unexpected death.

Q: What makes Payment Protection different from other insurance coverage?
A: Payment Protection differs from ordinary insurance in several ways. First, there is no physical exam required. Second, you have the flexibility to purchase the exact amount of coverage needed to protect your loans. Third, the cost is financed as a part of the loan; it doesn't stand apart as a separate issue, it's simply added to the monthly loan balance. Fourth, the cost is the same regardless of age, sex, or occupation. Fifth, there is no minimum purchase amount required. By contrast, some term life insurance policies cannot be purchased in amounts less than $50,000. And sixth, it allows you to participate in group coverage.

Q: Do I need additional payment protection if I already have disability and life insurance coverage through my employer?
A: Ultimately, the amount of coverage you need is dependent upon the needs of your family. Many financial experts agree that having one single plan is simply no longer sufficient. This is because many traditional plans, which can sometimes appear to be less expensive, are becoming more restrictive and provide fewer benefits than ever before. For example, some plans pay only a percentage of your salary and only for a limited time in the event that you become disabled.

Q: How do I determine if a Payment Protection Plan is right for me and my family?
A: Consider your unique needs based on the loan amount and your existing coverage:

1. Who will pay bills if I am unable to? Most people purchase credit insurance so their debts won't be a financial burden to their dependents.
2. Is the new loan amount small enough that payments could be handled easily without credit insurance? If circumstances (such as disability) would cause you to be unable to work, would it be difficult or impossible to make the loan payments?
3. Do you currently have enough savings and/or insurance to cover your needs? Experts recommend that a family of four maintain life insurance at about six to seven times their annual salary... at a minimum, three times the household yearly income. Also, consider your current disability plan. Most employers pay only a fixed percentage of your salary for a limited amount of time. How does that amount compare to your current monthly expenses?

Q: When should I purchase Payment Protection?
A: Although you can purchase credit disability or credit life insurance at any time, the best time is when you are applying for a loan. Simply ask your lending representative about the payment protection plans available. In most cases, like at your Credit Union, it's easy to obtain. If you already have an existing loan, at your Credit Union for example, contact your lending representative for advice on how to add the credit disability or credit life insurance program. Disability and life insurance plans vary widely, so be sure to consider several alternatives before making a choice. And remember, your Credit Union offers low cost payment protection that is easy to obtain.

If you would like to know more about Credit Disability or Credit Life Insurance, or get a cost estimate, call Member Services at (407) 277-5045 or toll-free (800) 443-6887.