What is Credit Insurance? Currently on the websites of banks online (home banking) when we try to make a bank loan inhales some additional fees and costs like credit insurance. But is it optional or mandatory? Many have asked us if when hiring a personal loan, the contractor is required to make payment such insurance. In fact, in personal loans and payroll loans, are not mandatory, only in real estate loans and real estate mortgages there is the mandatory.
What is Credit Insurance
One of the necessary steps for applying for a personal loan is no doubt borrow money from the bank or financial. The process is the same for all and without distinction of age (some cases) or social class. That is, the fact of being retired, pensioners, public servant, private worker, salaried, student or autonomous. Anyone can make the request.
In the loan for pensioners and retirees where the discount is made on the benefit, the insurance is already embedded in the value of the benefits in many of the operations. In real estate loan is mandatory to avoid insolvency. In vehicle financing there is also no compulsory insurance.
Already the application for personal loan over the internet or direct with your manager will always come plus the value of the insurance lender or better known as “loan insurance”, perhaps what you do not know is that who decides on this option, it is you and not the banking system.
Credit insurance or loan insurance
“Credit insurance or loan insurance” may be somewhat different in features, but the primary purpose of it is to protect the capital loaned to the client. This operation is intended to ensure that in the event of non-payment of the loan for any reason, the debt is covered through insurance, ie the amounts lent will be refunded to the financial institution.
There are numerous credit insurance solutions and proposals for different coverage, each bank or financiers who offer the personal loan online defines which insurance to offer their clients. In general, the coverage covers the case of temporary or permanent death or disability of the client, there are also those that cover accidents, loss of work and so on.
Why is credit insurance done?
The credit insurance made on personal loans also differ in how to cover the capital, some cover part or all of the cost of the installments or all the financing if necessary.
We therefore conclude that ” personal loan insurance ” is completely optional, you are not obligated by law, it may even be by the lender’s credit policy in the accepted product (insurance), but it is worth mentioning that perhaps it is better to do once that you usually have coverage and the cost is relatively low for the risks involved such as loss of employment or temporary disability.