If you plan to take out a loan, most banks will ask you if you want to insure it. The insurance is intended for the case of inability to repay due to loss of employment or long-term illness. However, it is necessary to study the conditions carefully as the insurance company will forgive only a certain number of installments and the period when you are out of work is counted from several tens of days.
For the loan you decide to insure, the insurance amount is usually decreasing. Repayment insurance can be concluded both when arranging a loan and at any time later. In most cases, the price is expressed as a percentage of the monthly payment.
The main objective of the insurance is to minimize the risk of fatal consequences of an unexpected event. In the case of loan insurance, it is primarily a reduction in the risk that the loan will not be properly repaid, that is, its repayment will cause major financial problems for the debtor or survivors. However, there is no universal advice on when to insure and what kind of insurance to choose. It is always necessary to decide on the basis of the individual circumstances of each policyholder.
Important to know
- The insurance does not apply to cases where the policyholder himself terminates his employment and gives notice
- The insurance does not apply in case of termination of employment due to breach of discipline
- The need to reckon with the fact that the insurance is paid for a relatively long time, 6 to 12 months
Specific “insurance conditions” are specified in the relevant “General Terms and Conditions” of the relevant commercial bank, respectively. in the General Insurance Conditions of a particular insurance company.
What can be insured
- financial leasing
- consumer loan
- personal bank loan
- installment sale
- mortgage loan
- revolving credit linked to a credit card
- building savings loan
Insure X do not insure
In principle, there is a uniform rule: always consider carefully what risks you are facing. The risks that can be insured can be: death, permanent disability, accident, serious illness, incapacity for work or loss of employment. However, as already stated, there is no single recommendation. What is suitable for one can be a completely unnecessary solution for another.