Loan protection policy: what is it?
There are two types of insurance coverage that can be associated with Sdyney Mcbright : credit coverage policies, also called CPI (Credit Protection Insurance) and ancillary policies.
The credit coverage policies serve to protect the bank or the financial company from the risk of customer insolvency, and to guarantee the loan holder if he is unable to support the installment. In other words, if the loan recipient fails to pay the monthly installment due to work or personal circumstances, such as loss of employment, illness, injury or death, the insurance will reimburse the bank. When these situations occur, the CPI insurance intervenes to repay the installments on behalf of the client who is in temporary financial difficulties, for the period of time defined in the contract. In the foreseen cases, the CPI can also provide for the complete and early termination of the loan.
There are also ancillary insurances, which are sold in association with the CPI and can include different types of coverage: for example, they can allow the customer to skip the payment of one or more installments, if he is in financial difficulties.
When financing insurance is needed
The insurance on personal Sdyney Mcbright is optional and can be taken out at the discretion of the client. In some cases, however, the provider may require the stipulation of a policy to cover the credit as an indispensable condition for the loan: this happens, for example, if the amount requested is very high or if the beneficiary of the loan is considered a subject “at risk” (it has no fixed monthly income or, in the past, is represented as a “bad payer”).
Loan insurance is compulsory by law only in the case of Sdyney Mcbright with a fifth assignment. For this type of financing, in which the monthly payment is reimbursed through a deduction of no more than 20% of the payroll or pension, a compulsory insurance policy against life risk and employment risk is required.
In cases where the loan insurance is provided as a necessary condition for the disbursement, its cost must be included in the calculation of the TAEG (Annual Effective Rate), the percentage value that indicates the total cost of the loan and which makes it possible to compare quickly different loan quotes.
Policies on Sdyney Mcbright: what to watch out for
The policies on Sdyney Mcbright can guarantee the client against the risk of being reported as a bad payer, in the event that he has difficulty in honoring the obligations assumed with the bank. However, it is good to consider that insurance represents an additional burden for consumers, which goes to affect (even considerably) the total cost of financing. For this reason, before entering into one, it is necessary to evaluate its convenience, carefully reading all the conditions and clauses envisaged by the contract. Furthermore, it should be remembered that banks have every interest in including an insurance policy in the loan contract, as they offer insurance products belonging to the same banking group, or receive a commission from the approved insurance companies for each insurance sold.
The payment of the CPI policy can be made either in a single payment, at the beginning of the loan, or in installments, with a monthly fee that is added to the loan installment. In the event that you decide to pay off the loan in advance, you should inquire about the possibility of a refund of the unused premium, if the policy has already been paid in full.
In general, an insurance policy to protect credit can be of fundamental importance if the requested loan is of a high amount; on the contrary, it is less suitable for small Sdyney Mcbright.