A life insurance policy is usually presented along with the fees charged when the transaction is approved after the documentation provided in the loan application. There are various reasons to take out this type of policy, which is called credit life insurance. Now, let's take a look at the scope and guarantees of insurance you are required to obtain in your loan application.
What is credit life insurance?
Credit life insurance is basically the same as term life insurance. Only when you apply to the bank for a loan is the policy coverage a little different.
Life insurance is basically a type of insurance that insures the family or relatives of the insured by providing compensation in the event of the death or permanent disability of the insured as a result of illness.
According to the insurance guarantees contained in the loan application, the loan debt to the bank is repaid by the insurance company in the event that the person who provided the loan dies or suffers permanent disability as a result of illness or accident. In other words, the remaining debt of the loan is not transferred to the borrower's heirs and is covered by the insurance company.
Is credit life insurance mandatory? How long does this take?
It is not necessary to have life insurance when applying for a loan. However, banks require you to have this insurance in their loan applications. The reason is to ensure that the relatives of the person applying for the loan and the bank do not have a problem during repayment.
One of the most curious questions is how long do life insurances take loan applications. The insurance period is usually until the end of the loan repayment. Don't worry if your insurance period expires while the loan continues to be repaid. You don't have to get insurance again. Of course, if you wish, you can specify the insurance period before issuing the insurance policy.
Can the life insurance provided in the loan application be canceled later?
You can cancel the insurance policy prepared in your name before the end of the policy period. For this, you can inform the bank that you want to cancel the insurance. If the cancellation does not occur, you can apply to the Consumer Arbitration Commission with a petition.
It should be noted that it may not be mandatory to have life insurance in loan applications. However, if you want to apply for a housing loan, you must have compulsory earthquake insurance.
How are credit life insurance rates determined?
As with all insurance, the guarantees and limits contained in the policy are taken into consideration when determining life insurance rates for your loan application. In addition, criteria such as withdrawn loan amount, monthly loan interest rate, loan debt balance, gender, occupation, and age are also specific.
Is a life loan mandatory from the bank?
Banks insure people who apply for loans through insurance companies they have contracted with. However, you do not have to obtain insurance through the bank. You can get it from any insurance company you want. Of course, you need to make sure that the necessary guarantees and limits to secure the loan debt are in the policy.
Secure your loved ones and yourself with life insurance
Loan debts remaining for the insured after a health problem and for the insured's family after death can become a problem. That's why you can get a life insurance policy to protect yourself and your loved ones.