The Car Dealer's LA&H

“LA&H” are insurances that you can buy on you auto loan. It is an acronym for two types of loan insurances: (Credit Life insurance) and (Accident & Health insurance). The costs of these insurances are charged to the loan and the benefits are paid toward the balance of the loan.

 

Credit Life insurance will pay off the balance of the borrower’s debt in the event of their death. This would allow the vehicle to be included in the borrower’s estate without being attached by the bank. Obviously, if the customer isn’t worried about what happens to the vehicle when they die this is a worthless policy. Sometimes, the “F&I” manger will pitch this coverage as protection for the borrower’s family, as if the debt would be assumed by their family. This is only applies if there is a co-signer on the loan.

 

The second type of insurance is “Accident & Health” insurance.   Essentially, this will pay the car payment if the borrower becomes sick or injured and is unable to work. Keep in mind, this policy can have many restrictions attached to payment of the benefits and will almost always require a waiting period. 

 

These insurance are commonly sold as a package, not as individual policies. In other words the “F&I” manager will tell the customer that they are “included” to “protect” the customer. Buyers should recognize that these policies may duplicate their insurances policies they already hold. 

 

The costs of these premiums are regulated by the selling dealer state laws. In many states, dealers will not even offer these policies to the buyer because of the requirements and the cost of the premiums versus potential profit. In other words, they would rather make a $1000 by selling “Mop and Glow”.

 

As when most insurance policies the customer can cancel their policy at any time and receive the unearned premium.