Can A Lender Require Credit Life Insurance?

  1. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! The lender is going to ask you to have this insurance if they believe there is a reasonable chance that they may not get repaid. This is a common requirement in mortgage lending, for example, when large sums are loaned. As such, it may be a requirement for them to issue you the loan. You can either decline to purchase the insurance, and look for another lender, or if possible, show them proof that you have another way to pay off the loan if needed - like a sizable life insurance policy. It may be cheaper to purchase a decreasing term loan, and show them that, than it would be to purchase their policy. If you would like more details, please contact me. Thanks for asking!
    Answered on May 29, 2014
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