Sometimes, banks, but also non-banks offer us voluntary insurance linked to the granting of a loan. Insurance policies have their advantages and disadvantages, which must be known before launching to hire them or not.
What is insurance-linked to credit?
In general, the insurance offered with personal loans can be of two types: payment protection insurance, which offers coverage in case of not being able to face the loan payment due to disability, unemployment or other circumstances, and insurance of life, which would pay off the loan in case of death of the holder. In this case, they are more common in mortgage loans, for their long term.
Insurance protects us in case of improvisation, but they have an additional cost to consider. The price may vary depending on many variables, from the age and personal circumstances of the policyholder (loan holder), to the amount of the loan itself or the term of the loan.
The insurance payment is made by installments, often added to the loan installment, although some entities allow it to be paid in full at the beginning or even to finance it together with the loan.
Can I get insurance for my loan?
If the possibility is considered, it must be assessed, and there is no single or correct answer: it will depend on the circumstances. Obviously, taking out a loan without insurance is cheaper, but adds some interesting coverage for possible unforeseen events that would leave a situation solved instead of creating an additional problem.
The cost is variable, usually expressed in terms similar to calculating a percentage of the loan amount, similar to an opening commission.
In the case of online loans, the situation is the same: although it is not contracted through a bank, the same conditions apply and the insurance provides the coverage that is contracted.
It is advisable to compare loans with and without voluntary insurance. In a broad and competitive market, the options are multiple. Statistics show that the tendency to contract voluntary insurance is much higher in case of high loan amounts, while, for mini-credits or short-term loans, it is not profitable and the vast majority of people can save that additional cost.
A similar situation occurs with long-term, multi-year loans, where there is a greater probability of unforeseen events or events that alter our ability to return the money. The goal is not to go into default or default, because the cost of the loan goes off, and that’s where insurance comes into play.