Credit insurance is an effective tool for protection against numerous risks. Both for the bank and for the borrower. When insuring risks, the lender increases the likelihood of getting his money back, and his client - the debt repayment.
However, the policy may be too expensive, and its execution is not always advisable. Unscrupulous banks may impose it under the guise of mandatory, while in reality it is not. Moreover, insurance does not always affect the approval of a loan. Therefore, we will understand the terms and programs, and also talk about the cases in which the policy is really worth getting.
What is credit insurance and what types are there?
In fact, insurance is the protection of property interests in the event of certain circumstances. In the case of loans, the latter usually means non-payment of debt. For example, if the borrower cannot make germany mobile database payments due to loss of employment and this fact is an insured event, then he will be released from the corresponding obligations. Depending on the terms of the agreement - in full or in part. The money will be paid to the bank by the insurance company. As a result, there will be no delay, the debt will not be collected in court.
The most common types of insurance when applying for a loan are the following:
Collateral insurance – involves the protection of property provided to the bank as collateral for the debt. By the way, this is the only mandatory type of insurance when applying for a mortgage loan.
Life and health insurance – provides protection against various risks. In particular, against illness, injury, and death.
Property rights insurance – allows you to insure the risk of loss of property; the program is especially in demand when applying for a mortgage on secondary housing.
If we are talking about regular consumer loans, banks most often offer clients life and health insurance. They explain this by the interests of the borrower: if he loses his ability to work or dies, the debt will be repaid and will not be transferred to relatives who have accepted the inheritance. Another popular type of insurance is protection against job loss - it assumes certain compensation in the event of layoffs and dismissal under specific circumstances.