Credit Life And Disability Policies In Texas

Most every person in Grand Prairie, Arlington, Mansfield, Fort Worth, Bedford, Mesquite, De Soto, Duncanville, Weatherford, or anywhere else in the State of Texas, has at one time or another purchased something on credit. Many times when a credit purchase is made a person will have the opportunity to purchase some sort of insurance that will pay the debt in the event that you become disabled or killed before the debt is repaid.
Almost all credit card companies will offer credit life and disability for a few extra dollars each month and charged a fee based on the total amount of the debt due on your credit card. The payment for this insurance is going to be charged and included in your credit card payment. Another place most people will see this type of insurance being offered is with a home purchase. If you do not purchase this option when you purchase the home, you will receive numerous solicitations in the mail offering this insurance to you. Another time a person is almost always requested to purchase this type of insurance is when an automobile purchase is made on credit. If this type of insurance is purchased in a car transaction it is going to be at the point of sale and is usually a lump sum and rolled into the loan for the vehicle.
Texas laws exist to regulate credit life and disability policies in Texas. The chapter of the law dealing with this is cited as the Act for the Regulation of Credit Life Insurance and Credit accident and Health Insurance.
Texas Insurance Code, Section 1153.003, defines “credit accident and health insurance” as insurance to provide indemnity for payments that become due on a specific credit transaction of a debtor when the debtor is disabled, as defined in the policy. It defines “credit life insurance” as insurance on the life of a debtor in connection with a specific credit transaction.
The above definitions are found in Chapter 1153 of the Insurance Code. The various subchapters define and describe how this type of insurance is regulated.
This is an area of insurance that is ripe for abuse. Too many times this insurance is needed most when the debtor dies. Usually it is only the debtor who knew the insurance existed. Good probate attorneys know to ask questions of survivors that will get them to search for this type of insurance to cover the debts of someone who has passed away, but too often people who die did not have estates left behind that the survivors feel it is worth getting a probate attorney to look into.
One area where people get abused quite a bit is when these policies are sold at the time of a vehicle purchase. The sales person is almost never qualified to sell this type of insurance and their motive is to just sell the policy in order to get a commission off the sale. As a result, the paperwork filled out for the purchase of this insurance is usually not completed properly with the debtor. In other words, the salesman fills out the paperwork without really going over important parts of the application. In fact the salesman will not even ask a lot of the relevent questions, rather the salesman will just fill out the paperwork in the manner they know will be acceptable for completing the sale without regard to the truthfulness or completeness of the answers to the questions. The result of doing it this way is that when a claim for benefits is made, the claim is denied because of untruthful or incomplete answers to the questions.
Experienced Insurance Law Attorney will be able to tell you plenty of “war stories” of examples where this credit life and disability insurance has been improperly handled by those selling the policies.