Loan Protection Insurance

Loan protection insurance, often offered in the F&I office, is optional insurance that covers loan payments in case of unforeseen events like death, disability, or job loss. In Canada, these products might be referred to as credit life insurance (pays off the remaining loan if the borrower dies) or disability insurance (makes payments if the borrower is unable to work due to illness or injury). Dealerships sell loan protection as a way to secure the buyer’s financial commitment, giving peace of mind that the car won’t be repossessed due to missed payments under dire circumstances. It requires clear disclosure, and in some provinces, sellers need an insurance license to offer this product.