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Inside Insurance Slang – Why You Don’t Need A Choke and Croak Credit Policy

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By: Todd Halterman April 10, 2017 0

insurance insider slang

As with all professions, practitioners develop a sort of shorthand or slang to describe the various elements of their day-to-day business. Sometimes the slang has a dark edge – and a nefarious intent.

Take, for example, the phrase “robbing the coffin.”

That little ditty refers to someone who has a relationship with a person considerably older than themselves – often in an effort to gain from life insurance policies of the soon-to-be deceased.

Yet another interesting bit of slang is the “Russian Rear End.”

The RRE is a scam which describes a scenario where two cars are employed to essentially create an automobile accident where the “victim” driver appears to be at fault. The car ahead of the target suddenly stops short while a companion car in on the scam blocks the victim from avoiding the collision. The passengers in the lead car all claim a variety of injuries – from neck to back pain – and then collect thousands of dollars from insurance companies. The scam also relies on unethical orthopedists to provide shaky testimony to back the claims.

Auto dealerships are renowned for their ability to squeeze every last dime out of a business which operates on the narrowest of margins, so they have their own slang to describe one insurance-based technique.

One shady method, a “Choke and Croak,” describes selling car buyers a supplemental life insurance policy as financing is arranged. The insurance pays off the buyer’s loan should they die, and it results in “back-end profit” for a dealer. Mortgage, auto loan and appliance financing companies regularly employ the technique as well, and while they sell the coverage as a way to “pay off the loan balance in case you die or become disabled” (hence the choke and croak or choke), the policies are aimed at lining the pockets of the retailer.

Finance expert Clark Howard, the author of Get Clark Smart: The Ultimate Guide for the Savvy Consumer, says such credit life and disability insurance is a waste of money as the resulting claim is paid directly to the lender – not to your family. According to Howard, buying a “Choke and Croak” policy means you’re simply paying for a policy intended to make sure the lender gets paid.

“By buying it, you are paying to protect the lender. People agree to buy credit life in the mistaken notion that they’re protecting their loved ones from their debts. Let’s say you have an outstanding mortgage balance of $50,000, and you’re concerned that your family will lose the house if you die. The better thing to do is buy a term life insurance policy that pays your loved ones directly. Then they can decide how to use the money,” Howard says. “It may be better for them to keep the mortgage in existence and use the insurance proceeds to pay for living expenses.”

The bottom line: it’s crucial to do a bit of homework before you sign on the dotted line for any insurance policy offerings.

Stay out of your own way and don’t sign on for “A Packed or Loaded Payment.”

(Eds. note: In case you’re wondering, “packing or loading payments” is a slang term used to describe the methods some auto industry types use to get customers to agree to purchase additional products from credit insurance to service contracts to chemical protectants or security devices. This method generally goes down without a true revelation of the impact these offerings have on a consumer’s monthly payments.)

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