With large financial obligations, the bank often offers us to take out additional insurance. Sometimes it is even a requirement needed to receive a loan. Suppose, however, that we can make an independent decision on this matter. What exactly is credit insurance and is it worth it to decide?
What does credit insurance offer us?
There are three basic credit insurance: from death, permanent damage to health and loss of job. The first two are a guarantee of security for our loved ones who will not take over our debts in this way.
The third protects us from situations when our liquidity is suddenly strained. The loan therefore gives a sense of security to two parties. The borrower protects himself from unexpected debts, and the bank gains greater certainty that the liability will be repaid.
How much does loan insurance cost?
This is a complex issue that depends on many factors. First of all on the scope of insurance. We can only choose a life insurance policy or extend it to other random situations: loss of health, job loss and even turbulent situations in the economy. Important factors affecting the total cost are also: repayment date, loan amount, age, marital status, professional situation.
We will pay cheaper by deciding to pay the full amount when signing the contract. Payment in installments will entail additional costs. All in all, the cost of insurance can range from a few to even a dozen or so percent of the value of the entire liability.
Is it worth to opt for insurance?
This is an individual matter that each of us should think about. Especially when we decide on a large financial commitment, and in the future we see various risk factors that may adversely affect our situation.
It is definitely worth paying a little more than later struggling with a large debt. Let us remember that responsibility also covers our loved ones.