Credit repurchase insurance coverage is a contract for the benefit of a legal or natural person having in the course of repayment a loan of money of the grouping of loans type contracted with a banking establishment or a financial organization.
How does credit repurchase insurance work?
This is an insurance policy which takes care of the good repayment of the capital remaining to be owed in favor of the lender in the face of the numerous risks of insolvency that the borrower can undergo throughout the life of his loan. repurchase of credit .
It is in a common interest that the bank and the customer agree to back up borrower insurance coverage to the loan buyback.
Although it is not compulsory but optional according to its regulations governed by the Lagarde Law, the creditor may require it to validate the customer financing.
A bank or a financial organization may very well refuse to proceed with the release of credit funds after issuance of the loan offer in the absence of the loan repurchase insurance coverage .
Usually, once insurance is required, the cause is an estimate of the high risk of default by the debtor and therefore the lending institution protects itself against the risk of borrower insolvency. When is it necessary to set up a borrower insurance policy for my loan buyback?
Take out borrower insurance for loan redemption
It is recommended to take out borrower insurance for repurchase of credits in order to guard against the risks of life which can lead to a temporary or definitive inability to be able to honor the repayments of its schedule.
The bank does not have the right to require the borrower (s) to take out a specific insurance contract. For example, an insurance delegation, also known by external insurance is preferred to the group insurance contract of the lender.
However, the guarantees offered by the insurer must be equivalent to the guarantees required by the bank's insurance contract.
The subscriber must then meet the admissibility criteria by submitting to a health questionnaire and a medical examination if deemed necessary.
Loan insurance guarantees
The various borrower insurance guarantees are broken down according to the choice of :
- Job Loss
- Death
- Total permanent disability (IPT)
- Permanent partial disability (PPI)
- Temporary incapacity for work (ITT)
- Total irreversible loss of autonomy (PTIA)
Our section dedicated to the theme of loan insurance is specially put online to better inform people looking for information to broaden their knowledge about the world of loan insurance .
You can also consult our section on the advantages of credit redemption to assess your needs