Should you take out borrower insurance for a consumer loan?
Posted on December 6, 2016 by Marion
Regardless of the type of loan, lending organizations always offer borrowers an insurance offer. Although the law does not require the purchase of loan insurance, it is required for a mortgage, but generally only offered for a consumer loan. So, is it really necessary that you subscribe to it?
Loan insurance for consumer credit
Loan insurance is a contract offering guarantees for death, disability, incapacity for work and loss of employment (optional guarantee). It allows you to cover the risks of repayment default thanks to full or partial coverage of your monthly payments, depending on the guarantee concerned and the amount insured.
Whatever your choice, before signing any contract, you must carefully check the details of the exclusions of the insurance being offered to you. In fact, generally, loan insurance linked to a consumer loan is intended to be rather restrictive. For example, they cannot be triggered in the event of maternity.
Also, the job loss guarantee only concerns employees exercising their professional activity on a permanent contract, can only come into play in the event of unintentional dismissal on your part and excludes certain situations such as dismissal for misconduct. You must also be attentive to the waiting period: it is only after the end of a period fixed in the contract that the insurer takes charge of the repayment of the monthly payments of your loan.
When you take out borrower insurance, an information notice must be issued to you. Be vigilant about the insurance clauses.
Take out consumer loan insurance to protect yourself
If taking out insurance for your consumer loan has a cost, it is still recommended to you to protect yourself against any possible risk of default that may arise during the repayment period of your credit. This gives you peace of mind, knowing that it is the insurer who replaces you to reimburse your credit in the event of an incident.
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