A personal finance consultant says private insurance is far more beneficial than creditor insurance.
Preet Banerjee, finance expert, author and podcast host, says creditor insurance, while at times helpful, is far less beneficial than a private insurance policy.
Creditor insurance is a policy that pays off a debt, or makes minimum payments in the event something happens to the receiver, such as job loss or death.
However, Banerjee says things are not always as helpful as they may seem.
He says if you get a mortgage worth $500,000 and the monthly premium on insurance is $50 a month, if you die when the balance of the mortgage is $300,000, the benefit is therefore $300,000, meaning there is a declining benefit, even if the premium remains the same.
However, a private life insurance policy works differently.
Banerjee argues that a private life insurance policy will maintain the same benefit regardless of when the receiver passes away, providing more flexibility to those left behind.
Not only that, premiums are often much lower than what creditors offer, as well.
Your Money with Nancy Snedden of BDO Debt Solutions Licensed Insolvency Trustees air Saturdays at 3:00 p.m. and Tuesdays at 7:00 p.m., 2:30 p.m. and 6:30 p.m. in Labrador on VOCM.