Be careful with credit life & disability insurance!
In addition to being expensive, companies that provide car loan (or mortgage) life & disability insurance often practice post-claim underwriting. Post-claim underwriting is a shady practice, where only after the insured becomes disabled or dies does the insurance company actually determine if they were insurable in the first place! In the worst case this can mean the claim is denied, and there is every incentive for the insurance company to uncover a reason to deny a claim.
Here's a short article about credit life insurance: CBC.ca - Marketplace - What is Credit Life Insurance? Excerpt:
Car dealers sometimes sell policies
without asking health questions. But
if the policy holder dies, and cause
of death was related to a pre-existing
medical condition, the policy may not
pay out. This even applies if the
policy holder had been to the doctor
just for a consultation about an
illness they had. [emphasis mine]
Car dealers can make large commissions
selling this kind of insurance — from
15 to 48 percent per policy.
You can also watch CBC Marketplace's "In Denial" video segment here. The show principally refers to mortgage life & disability insurance, but the issues are similar with other loans that offer life & disability insurance.
One more article: Ellen Roseman - Don’t buy insurance from banks. Excerpt:
Only when you or your loved ones make
a claim under the insurance do they
contact your doctors and start
checking into your medical history.
Then, they may decide you don’t
qualify for coverage — and in fact,
you may never have qualified — despite
having paid premiums for all these
For this reason, you may want to consider real life insurance, purchased from a life insurance company through a licensed life insurance agent. Real life insurance policies underwrites a policy up-front, and once approved, you are covered. Also consider a cheaper used car that won't be as much a burden should the worst occur.