| Credit Insurance Guide |
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Credit Insurance is an insurance policy that continues the repayments of a particular debt in the event of the policyholder becomes financially unable to do so because of illness, death, redundancy, or any other specified cause. Most lenders offer credit insurance on their personal loans and include the premiums on the insurance as part of the monthly repayments on the loan.
Credit insurance is not included in the calculation of APR so a loan with or without credit insurance would have the same APR but different monthly repayments. For example, if you wish to borrow £5,000 over 3 years at an APR of 9.7% without credit insurance, the monthly repayments will be £159.77 and total repayment over the loan term would be £5,751.70. This same loan with credit insurance would still have an APR of 9.7% but the monthly repayments would be some amount higher than £159.77.
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