Cancellation of loan insurance during its termination.
Credit insurance is a broad issue. Unfortunately, consumers often have their knowledge on this issue based on the advice of bank advisers, for whom a favorable solution is that the customer would benefit from insurance. Is it necessary? When can you opt out of loan insurance during the course of the loan and what is it then? I explain.
Are you going to take out a loan or a loan? You must remember that the bank employee will ask you for product insurance. In practice, the types of insurance you can take advantage of are many. Examples include: job loss, life or the consequences of unfortunate accidents. What’s more, you can also sign an individual insurance contract or join a group insurance contract. From the option you decide to depend on, among others Obligations of the insured and his rights. You can always opt out of insurance, but it will have its consequences.
Is loan insurance obligatory?
Looking for an answer to the question of whether and when insurance is necessary, you must go to the Act of May 22, 2003 on Compulsory Insurance, Insurance Guarantee Fund and the Polish Motor Insurers’ Bureau. According to art. 3.1. this legal act is only compulsory insurance “liability insurance of the entity or property insurance, if the law or the international agreement ratified by the Republic of Poland imposes an obligation to conclude an insurance contract”. This means that by purchasing a banking product you have the right to choose – you can opt for insurance or not.
Even if it is not mandatory, it is worth considering them. Why? Your loan insurance can help you. The bank will propose them, among others, when it improves your creditworthiness.
Credit insurance and benefits for the bank
The answer to the question why banks want the customer to sign an insurance contract is not difficult at all. It is worth remembering about the concept of ” bancassurance “, which refers to the cooperation of banks in insurance companies. Banks – until recently – have simply benefited from the financial benefits of selling banking products along with insurance. After the implementation of the Recommendation U, prepared by the Financial Supervision Authority, they should not offer you products that are not adapted to your needs.
Another reason why banks are happy to offer you insurance in a package with a loan is to protect your interests. Even the best creditworthiness will not guarantee the lender that you are delivering on your obligations. Insurance is therefore treated as an alternative to other security measures, e.g. on mobility or immovable property belonging to you as a borrower.
Is it worth using credit insurance?
Banks often offer their clients insurance along with a loan. For this purpose, they use a trade publication, called “cross-selling”. It involves offering you additional products related to others, so that you do not have to browse other offers from sometimes competing entities. This solution can actually be beneficial for you if you want to minimize the risk associated with getting a mortgage, for example. Life insurance or loss of employment allows you to properly protect the interests of both parties, and at the same time you can take care of your or your relatives’ situation in an emergency.
|What is cross-selling?|
|It is nothing else than selling the main product with others connected to it. For example, if you want to take out a mortgage, the bank will offer you, for example, a reduced loan if you sign up for an account and decide on additional insurance.|
The use of cross-selling techniques also allows you to offer comprehensive assistance. When talking about the loan and insurance attached to it, in fact you will not have to review the offer of insurance companies operating on the market. On the other hand, taking advantage of the bank’s offer does not have to be beneficial for you.
Can you opt out of loan insurance?
If you have decided to sign a loan agreement with insurance, you can cancel your insurance coverage at any time. This does not mean, however, that this will not affect your commitment to the bank. The first step that you should take if you decide to opt out of insurance is to read the provisions in the contract carefully. There you should look for information about whether the bank will increase, for example, the margin or interest on an uninsured loan. Since this practice is common, it is worth it to recalculate the costs – you may find that the use of insurance effectively reduces the amount of your monthly installment.