Loan insurance – is it profitable?
In some cases, loans and credits are covered by compulsory insurance. However, sometimes it happens that banks and para-bank institutions offer us a number of voluntary insurance. Should we buy loan insurance if we can and do not have to buy a policy? The answer to this question is provided in this article. We invite you to read carefully!
Loan insurance – is it worth it?
Loan and credit insurance is a relatively new offer in banks and loan institutions. Initially, they were used for loans amounting to quite large amounts, including housing loans. At present, we also meet them as an option to other offers – we are talking about, among others, cash loans, payday loans and car loans. In this article, let’s focus on loans where the purchase of insurance is not required and the lender encourages us to buy them.
What exactly will be insured?
For banks and parabanks, a cash loan insurance policy is a special type of collateral. In this case, the principle is very similar as it is in life or car insurance. If something bad happens, the insurer is obliged to bear all the costs incurred. But what can cause it to pay this money and what will be the final amount?
Cash loan insurance mainly applies to situations where borrowers are unable to repay all their liabilities themselves. Money is paid in the event of the borrower’s death, when he loses health and adds significant injury, or if he is dismissed. It is of course worth knowing that not all insurance policies will give us such protection. For this reason, it is worth to read the GTC. GTC are general insurance conditions. It is in this document that we receive information about what we can gain from the loan insurance policy.
Tricks in the contract – you have to watch out for them!
Unfortunately, it often happens that the contract may contain various tips. This applies to both loan and credit agreements. For example, security against dismissal may, for example, only apply if the borrower is dismissed by the employer and not released on his own request. In such a situation, the payment of benefits may be limited – for example, the insurer will pay installments for us only for a few months.
Another common trick in the contract is that related to the payment of compensation in the event of illness or loss of health. The amount of illness that concerns payment of benefits is usually very short. We can find cancer, heart attacks or stroke. In a situation where the borrower dies shortly after taking the loan, insurers often question the transfer of funds to the money lender.