Borrower insurance definition → how to define loan insurance
It is true that a loan from an institution can help you realize your most important projects. However, it is important to make sure that you do things properly and to put in place a loan insurance . In this article, we will tell you more and define this borrower insurance to help you better.
Definition of loan insurance
Loan insurance, also called credit insurance, is an option recommended by the bank to all people who make loans at home in order to protect them from a possible accident on a daily basis.
Is loan insurance compulsory?
In general, you will not be required to apply for this type of insurance. On the other hand, the bank will encourage you most often to subscribe to it. Some institutions even go so far as to complicate or refuse a credit application without loan insurance . Do not worry, because you will be in favor since you will be completely insured by the bank in case you have health problems such as a car accident or a crisis related to a disease that is eating you up.
The situations covered by a loan insurance
Indeed, a credit insurance can cover several situations such as total incapacity for work. In this case, your compensation will be paid to you according to the terms you have entered into with the bank in your loan agreement:
- either, you opt for compensation if you can no longer do your current job,
- you are compensated because you will not be able to do any more work. Note that in the first case, you will not be entitled to your allowance since you could still practice in other areas.
It may also be that you are declared Permanent Total Invalid or Permanent Total Unable . As a result, your insurance will be activated to cover your monthly payments until you are well and ready to go back to work.
Finally, you could also lose your job at any time. Thus, the bank can compensate you, even if it will not last forever . It is recommended that you approach your insurer to discuss possible ways to claim compensation.
The cost of a loan insurance
Note that the price of a loan insurance depends on the type of credit you will make and who will be covered by it. However, you must understand that your insurance will be included in your monthly payment, unlike a personal loan whose insurance is one more thing. If need be, do not hesitate to seek the intervention of an insurance broker to settle this detail with your bank so that you can have the best protection without spending too much money.
In short, the insurance borrower seems to be a good solution to help you pay your monthly payment in case of major problem such as incapacity for work. Also note that this will allow the bank to be properly reimbursed despite the uncomfortable situation that could occur. This is probably why the majority of banks insist that you should make a loan insurance, because it will be ideal for everyone.
