The next time you apply for a mortgage or personal loan, you may be asked if you want to buy credit insurance services, or it might already be included in your loan proposal. Credit insurance protects the loan in case you can’t make your payments. This type of insurance is usually optional, which means you don’t have to purchase it from the lender. In fact, the Federal Trade Commission, the nation’s consumer protection agency, says it is against the law for a lender to deceptively include credit insurance in a loan without your knowledge or permission. There are four main varieties of credit insurance:

Credit life insurance pays off all or some of your loan if you die.
Credit disability insurance, also known as accident and health insurance, makes payments on the loan if you become ill or injured and cannot work.
Involuntary unemployment insurance, also known as involuntary loss of income, makes your loan payments if you lost your job due to no fault of your own such as a layoff.
Credit property insurance protects personal property used to secure the loan if destroyed by events like theft, accident or natural disasters.

Before you decide to buy credit insurance from a lender, think about your needs, your options, and the rates you’re going to pay. You may decide you don’t need credit insurance. If you do, credit insurance can be an expensive form of insurance so be sure to do your research. Before signing any loan papers, have the lender explain all of the details to you