As you already know, consumer credit actually includes several different credit contracts, assigned credit, personal credit or personal loan and revolving credit or revolving credit. However, for these three types of contracts, the lending organization will offer and advise you to take out consumer credit insurance. We will therefore explain to you what this contract is for, how it works and the different clauses it offers.
Why take out consumer credit insurance?
Consumer credit insurance covers the borrower in the event of death, disability or loss of employment. This insurance is not compulsory, but it is generally offered and highly recommended by most lending organizations. The principle is simple, you now take out a consumer credit, the amount of which will be calculated according to your repayment capacities, or certain unfortunate events can reduce these capacities, which risks placing you in a difficult situation. Insurance helps to deal with these difficult situations by covering all or part of the reimbursements due.
What are the risks covered by consumer credit insurance?
The basic loan insurance contract covers 4 different types of risk
- Death and disability of the insured
The insurance contract covers the reimbursements necessary to settle the consumer credit in the event of death. In the event of total or partial permanent disability, the insurance contract covers part or all of the credit repayment installments.
- Total or irreversible autonomy of the insured
In the event of an irreversible loss of total or partial autonomy, the insurance contract covers part or all of the credit repayments.
- Incapacity of the insured
In the event of temporary total incapacity or permanent partial incapacity, the insurance contract covers part or all of the loan repayments.
- Loss of employment of the insured
In the event of loss of employment, the insurance contract covers a greater or lesser part of the reimbursements, or supports the postponement of the credit maturities.
Where to buy consumer credit insurance?
Even if most lenders include an insurance contract in their application, this insurance is not compulsory and can above all be completely dissociated from the loan contract. So if you want to take out insurance, you are not obliged to take out the contract that is offered to you and you can canvass other providers freely.
On the other hand in practice, it is necessary to evaluate the potential gains by comparing them to the steps to be taken to find another insurance contract. So for credits of a small amount, it is often better to take out the contract offered by the lender.
The consumer credit insurance clauses
As with every time you take out an insurance policy, it is very important to study the various clauses and exclusions carefully. Thus, most of the contracts offered with consumption credits exclude a large number of risks and can only be used under very specific conditions. For example, the loss of job will only cover employees and excluded the end of contracts, contractual ruptures, etc.)