Credit Insurance Isn’t Just for Customers
There are many reasons for consumers to consider acquiring insurance when financing major purchases. For example, credit insurance can help ease payments on lines of store credit, installment loans and other short-term advances. At the same time, retailers and financial institutions benefit greatly by offering credit insurance options to customers. One big reason? It can help protect patrons from lapsing or defaulting on payments.
A Little Safeguarding
Let’s use in-store, non-credit card financing as an example. Typically, a line of credit is offered at the point of purchase. The patron makes purchases using their line of in-store credit, then pays the purchase off in monthly payments, all of which is normally outlined in the initial application process. Sometimes, due to unforeseen major life events, the shopper has difficulty making those payments. A credit insurance policy would serve to relieve their financial burden, and also prevent the retailer from needing to deal with a lapse in payment.
Business owners naturally desire financial protection for their companies, especially when offering lines of credit. Just as credit protection safeguards customers, it’s also the best defense against payment and debt defaulting for the company. Without a safety net in place, accounts receivable and, ultimately, the company’s cash flow will suffer. To avoid these sorts of potentially disastrous situations, companies big and small should anticipate these risks and adopt an appropriate protection plan.
An Array of Options
There are plenty of credit insurance options available; each designed to address the various circumstances that can affect customers. Loan balance protection during an illness-related work stoppage, protection for property used as collateral and flexible payment options for retail purchases are just a few examples. However, before you begin offering these products, be sure to research each credit insurance package for the amount of protection they provide, overall costs and scheduled reporting. Once those questions have been answered and any additional industry requirements have been considered, credit insurance can be purchased with confidence.
For any business, having the right financial protection in place is a top priority. Offering lines of store credit and long-term loan payment options to shoppers can be a great business move — for both your customers and your bottom line.
Mike Ferris is the senior vice president of credit protection at Fortegra, a provider of credit protection, warranty and specialty underwriting products and services.