Are you planning to take out a loan and wonder how it is with this insurance? Mortgage and job loss: how to protect yourself? Is it possible to opt out of credit insurance? What exactly can bank loan insurance give us? Is this mandatory? Credit insurance and the borrower’s death: what is worth knowing? How much does mortgage insurance cost? What is loan insurance against loss of job? We invite you to read! We will try to dispel your doubts.
What does credit insurance mean?
Credit insurance has one basic task: to secure the bank’s interests. Why? Life can be unpredictable. The bank also does not have a glass ball that would allow it to predict that the borrower will continue to have a job in a month, and thus a stable source of income, whether he will remain healthy allowing him to continue working, etc.
What does loan insurance give you?
Well, it depends what! Credit insurance against job loss has a different nature, and life insurance is completely different. However, not only the type of insurance matters. Study the General Terms and Conditions of Insurance, all the principles on which the offer is based and any exclusions. You need to know in what situations you gain protection!
Credit insurance: is it compulsory?
Credit insurance is not legally compulsory, but it may happen that it will be one of the conditions that the bank will set for a potential borrower. Why? A simple example is mortgage insurance. A mortgage loan is granted for several years. During this time, the borrower’s life can change dramatically, which is why life insurance or mortgage insurance against unemployment is a popular solution. Sometimes consumer credit insurance is also required. You have to be prepared for the fact that if the bank does not expect credit insurance, it may have different requirements for the borrower.
Credit insurance cost
Let’s assume, however, that we decided to insure cash, mortgage or other loans. What’s next? What costs can generate a similar step? What is the cost of mortgage insurance? It is difficult to talk about specific amounts in this case, it is too individual an issue, depending on a number of factors. When analyzing costs, the method of paying the receivable should be taken into account. What does it mean? Check whether you will have to pay the entire amount immediately or whether it will be split.
Is it worth insuring the loan?
We already know that insurance is an additional loan security for the bank. What can it mean for us? Is it worth deciding on consumer credit, mortgage, etc. insurance? Is installment loan insurance a good idea? Generally, credit insurance is a solution that you should consider. If you decide to do so, you should always carefully consider insurance conditions and any exemptions. Why? If we are negligent in this case, there is a risk that we will count on security in the given situation, while in practice the insurance contract will not cover it.
TO CONCLUDE: credit insurance is increasingly one of the conditions set by banks. For example, mortgage loans are often accompanied by life insurance. When deciding on credit insurance, be sure to carefully read the applicable terms.