In the context of a credit redemption, as is the case for any credit procedure, the subscription to different types of insurance is generally mentioned. But what are these assurances really about? What is their interest and what is their cost? Here are some of the common questions that we offer here practical answers.
Loan insurance, what is it?
Loan insurance is a special type of insurance that protects financial institutions or banks against possible credit default of their borrowers. It may happen that the borrower is not able, for one reason or another, to repay the credit he has contracted. Cases of death, disability or job loss are the most common. In such circumstances, the various loan insurance policies subscribed allow the lending institution to guarantee full repayment of the loan. These insurances are temporary and are limited exclusively to the duration of the loan it covers. In general, this form of insurance is often supplemented by other insurance guarantees covering the coverage of various common risks.
What is the use of loan insurance?
In the context of a loan redemption, the role of loan insurance is to guarantee the debtor’s remaining capital in the event of death, disability, or financial incapacity. On the one hand, they allow the bank that buys credit to have the guarantee of taking back the capital it lends. And on the other hand, they allow the insured to avoid a seizure of his property in the insolvency situations described above. It is therefore an insurance that benefits both the credit institution and the borrower.
What is the price of a loan insurance?
Loan insurance is a premium whose valuation varies according to the capital granted or the credit remaining due. Their cost is therefore variable and each insurance contract indicates its basis of calculation. However, there is a certain range of price determination that is generally respected. Thus, the price of a loan insurance varies between 0.1% and 0.60% of the loan amount or remaining maturities.
Note also that all loan insurance is not mandatory. Indeed, even if it is recommended, the subscription to an unemployment insurance is not obligatory within the framework of a repurchase of credit.
In order to allow you to benefit from the best conditions for the subscription of different loan insurance, Octaloan offers the services of its reliable network of insurance partners . Do not hesitate anymore.