If you have a mortgage, loan, line of credit, or credit card, creditor insurance can help cover your payments if you’re unable to work due to illness, accident, or even death. It’s designed to protect you—and your lender—so you don’t have to worry about falling behind.
Creditor insurance usually covers one specific debt. If something happens and you can’t make payments, the insurance steps in to help. For example, if you pass away, the insurer pays off the remaining balance on your insured debt. If you’re disabled or critically ill, it may cover your minimum payments for a set period.
If you die, the insurance pays off the outstanding balance on your insured debt (like a mortgage or loan). The payment goes directly to your lender—not your family or heirs.
In most cases, if you are diagnosed with one of the critical illnesses specified in your policy or Certificate of Insurance, the insurance pays the balance on your insured debt. Pre-existing conditions are usually not covered, but some policies may pay if you’ve been free of the illness for a certain period (as noted in the terms and conditions). Premiums are based on the amount of the debt.
If you become a person living with a disability, this insurance makes the minimum required payments on your debt for a set time. It usually doesn’t pay off the full balance—you’ll need to resume payments when you recover or when coverage ends. The specific disabilities that qualify you for benefits will depend on the details outlined in your policy.
This is often a bundle of several types of coverage—critical illness, disability, job loss, and life insurance. If you’re injured, disabled, or lose your job, the insurance pays the minimum on your credit card or a percentage (usually 3-5%) of the outstanding monthly balance. If you die or have a critical illness, it pays off the balance owing at that time. Premiums for credit card balance insurance are based on your monthly balance and appear on your credit card statement every month. This insurance is optional—you don’t need it to get a credit card.
Creditor insurance isn’t one-size-fits-all. Here’s what to keep in mind:
Check for exclusions: Policies often exclude pre-existing conditions like asthma, high blood pressure, or heart disease. Read your policy carefully so you know what’s covered—and what’s not.
Review your existing coverage: Make sure you have enough insurance to meet your needs. Compare creditor insurance with other options to see what offers the best value for your needs.
Understand the terms: Each policy defines which disabilities or illnesses qualify for benefits, how long payments will be made, and any limits on coverage.
Know who gets paid: With creditor insurance, the benefit goes to your lender—not your family.
Creditor insurance can offer peace of mind if you’re worried about keeping up with payments during tough times. Take time to review your options, read the fine print, and choose coverage that fits your financial situation.
Always make sure your insurance professional is licensed by visiting fcnb.ca/check-now.