Creditor insurance is a type of insurance that pays the the entity (eg. a bank) an insurance pay-out if you either die or become disabled. It is paid directly to the lendor (ie. not you) and covers up the amount you have borrowed or the the amount of coverage that you have purchased. It usually requires no medical information but does have restrictive clauses that personal insurance plans might not have. Compare this to regualr personal insurance where you or your beneficiary is the ‘payee’ and where it often requires full medical and financial information.
Creditor insurance is useful where you are in a situation where you cannot get more personal insurance to cover your debt. For example, as an employee you may have group Long Term Disability insurance. This usually prevents you from obtaining more individual disability coverage. Or you may have a health condition that prevents you from getting life or disability insurance through a personal policy. Creditor insurance can be issued in these situations – with some restrictions (see: ‘Beware “Good Health” Clauses article below).
Credditor insurance is usually issed to you by the borrowiing institution (eg. bank) with little or no explkanation to you of how – if ever – the policy would be paid out. Usually it is a case of ‘underwrriting at time of claim’ and often will not pay out as a result. The Bingham Group Services plan that we offer, backed by Unity Life, is different in that it uses an understandable limitation: the 12 month pre-existing limitation. This essentially says that if you are suffering from something in the 12 months prior to your purchasing your policy, it may not allow a claim payment for that particular condition to be paid. All other types of unrelated claim situations, however, would be paid (compare to the ‘good health’ clause used by some banks).
Benefit: Mortgage Coverage
- $500,000 Life insurance – guaranteed issue
- Disability to cover monthly payments: up to $3,000
Benefit: Lease-Loan Coverage
- $500,000 Life insurance – guaranteed issue
- Disability to cover monthly payments for the aggregate amount of $500,000
Remember that the disability will pay for a disability where yhou cannot do your job and you are not working elsewhere. Length of benefit payment is based on your personal situation but does assume tyhat you will get better and return to work.
Benefit available up to age 64 for purchase and the coverage continues through to your age 70 for Life coverage and to age 65 for Disability coverage.
Call or email for a quote and be sure to have the details of youir loan available so that we may give you an accurate quote. Coverage can be issued instantly and emailed or mailed diirectly to you after receipt of the first month’s premium.
BEWARE “GOOD HEALTH’ CLAUSES in Group Creditor Insurance Products
It is extremely important to be vigilant about “Good Health” clauses being “tucked in”, innocuously, in the Group Creditor Insurance Products that are being marketed to you. The presence of that “Good Health” clause introduces a level of ambiguity and uncertainty that can only be resolved at the time of claims adjudication AND renders meaningless any prior “health questions”. The net effect is to provide a Group Creditor Insurance Product where questions start at DOLLAR ONE (not the $200,000 that is commonly held out) and leaves to guess work what claims will and will not be paid.
And so, if you encounter a “Good Health” clause then:
- Dealers do not know, for certain, what it is they are selling;
- Customers do not know, for certain, what they are buying; and
- Underwriters do not know, for certain, what they are funding (and what security they are getting).
Let us illustrate: The “Good Health” clause is typically “tucked in” at the bottom of the Certificate (after the explicit “Health Questions”) and provides for a confirmation from the customer that he/she is, to the best of his/her knowledge, “… in good health, both physically and mentally”.Now, what does that mean? Typically, it is defined as:
“(i) In the case of life insurance, the absence of any physical or mental condition that is likely to materially affect your life expectancy; and
(ii) In the case of disability insurance, the absence of any physical or mental condition that is likely to materially affect your future ability to work “
Now, what does that all mean? Your guess is as good as ours… and that is the point! At a minimum it provides the insurer of this product with a wide latitude at the time of claim adjudication to deny claims for any reason that falls within the broad scope of that “Good Health” definition. Presumably, those reasons will include all of the matters which are contemplated by the “Health Questions” …plus, plus, plus. And that means those “Health Questions” starting at $200,000 are no such thing. They apply at DOLLAR ONE.
Where you find a “Good Health” clause neither you nor your customer can know what sort of protection, if any, is in place. There is no such uncertainty with the BGS Group Creditor Insurance product (under written by Unity Life). There is no “Good Health” clause in our product and what you see is what you get. The terms are clear and certain and the customer gets what he pays for and is assured that if his claim ought to be paid, it will be paid. And that preserves Dealers’ relationships with their customers AND assures the underwriters that fund the premium that their security is good.
Remember, “Good Health” clauses are there for a reason and that is not to the benefit of customers. Know exactly what you are buying. If you don’t know what that is or the Insurer can’t plainly explain to you what claims will or will not be paid then you ought not to be buying or funding it. It is important for customers who are paying for the protection that they think they are getting.
BGS is one of Canada’s leading suppliers in the business of creating, marketing and administrating Group Creditor Insurance products. We enjoy a dominant position in the heavy truck and equipment leasing space (with over 1 100 dealer relationships) and the dominant position in the small to mid-cap leasing space. We area leading player in the recreation/power sport space with over 600 dealer relationships. Unity Life of Canada is a Canadian Incorporated Life Insurance Company which provides financial security to Canadians through innovative Life Insurance products and services. Based in Mississauga Ontario, Unity Life currently has more than 192,000 active policies and certificates and $1 3.8 billion of insurance in force (all figures in Canadian dollars as at December 31,2007). Unity Life has been assigned an “A-“(Excellent) rating by A.M. Best.
BINGHAM GROUP SERVICES CORP.