Thursday, 13 August, 2020

What do loans protect against and how much do they cost


Misfortunes go about people, including borrowers. What can you do to minimize the risk of exposing yourself and your loved ones to repayment when taking out a bank loan, when we encounter a random event that causes difficulties in the normal servicing of the loan repayment?

It is worth getting to know the insurance offer provided with loans, which are quite commonly offered in banks. What are the pros and cons of buying a policy? We analyzed the offer proposed by the players most important in the domestic yard. We invite you to read.

What do insurance packages protect us from?

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As you can easily guess, the range of insurance coverage offered for banking products, such as loans and credits, is quite diverse. We decided to take a closer look at these proposals and specify the scope of insurance protection that is offered to us by individual banks when taking on credit obligations. We checked that by taking insurance we gain protection in:

  • Good Finance in the event of death, permanent invalidity, temporary inability to work and loss of a job, and in the case of the extended insurance option also in the event of death as a result of an accident (accident), serious illness and total inability to earn;
  • Honest Bank, where we are protected in the event of death or death as a result of an accident, serious illness, loss of income or hospitalization, inability to work or disability,
  • Cooperative Bank in the event of job loss, hospital stay, death as a result of accident insurance or loss of earning capacity,
  • GBank, where we are protected in the event of death due to accident, incapacity for work or serious illness,
  • Good Lender in the event of death, loss of earning potential, loss of a job, serious illness or hospitalization.

Protection costs and exclusion of liability

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The scope of potential protection in the event of events that could entitle us or our relatives to benefit from an insurance benefit is quite wide.

As always, however, there is the issue of the cost of such collateral in the event of events that hinder or prevent repayment of the loan. The table below contains information on the price of insurance proposed by banks for individual loan offers.

However, the issue is when the insurer may refuse to pay compensation. Most often, protective liability is removed from the shoulders of an insurance company when we apply for unemployment benefit that occurred as a result of contract termination by mutual agreement.

We have even less chance of compensation when, for example, we have lost our health and apply for a benefit in the event of a serious illness or hospitalization.

Priceless security?

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It should be borne in mind that in a few months banks will be forced to comply with the latest regulation of the Good Finance Investment Corporation (GFIC), which decided to organize the Polish bancassurance market and reduce the banks’ appetite for additional earnings when offering insurance protection.

This regulation, Recommendation U, will allow a more transparent change in the cost of protection and is intended to shorten the practice in which the lion’s share of the protective premium (in extreme situations even more than 4/5) paid by the client is collected by the bank as remuneration for the sale of insurance.

The scope of potential protection that we gain by taking out insurance offered when taking out a loan or cash loan is considerable. Unfortunately, the costs of such security are equally great. It is always worth calculating whether we can afford such an additional cost, except for interest and commission.

Remember, however, that insurance is always included. You never know what might happen to us when you pay the debt. Cessation of regular loan repayment can expose us not only to financial unpleasantness, but also to even cancel our dreams about our own apartment. The prudent borrower has always been insured.

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