CONSUMER'S CREDIT INSURANCE

What is Credit Insurance?
Credit Insurance provides protection for the repayment of loans made by financial institutions or traders, following the borrower insolvency or payment default.
This type of scheme usually applies to personal loans or loans granted in order to buy houses, cars, domestic appliances, furniture etc…
Credit Insurance can also provide protection to the wholesaler granting credit facilities to retailers or distributors.

Importance of Credit Insurance and advantages to the lending institution
Credit Insurance provides tranquility to the Insured, in a manner that he can rest assured that any payment default from the part of his customers, will be dealt in a proper way guarantying a reimbursement of the debt. The Insured also saves money and time while dealing with unpaid bills; he does not have to worry about legal and practical aspects related to recoveries, seizures etc…,

Membership
Credit Insurance, related to specific plans or programs is subject to compulsory membership for all eligible borrowers.

Cover
Lenders generally maintain regular records of loans and are able to produce accurate data very easily when computerized.
Cover is digressive, meaning that the amount insured is the remaining unpaid value of the credit, which decreases monthly.

Down-payment
All credits are submitted to a minimum 20% down-payment meaning that the maximum cover is equal to 80% of the material sold.

Additional cover
Credit Insurance is always accompanied by a credit life cover and sometimes by another policy covering the material damage to the goods object of the transaction.

Procedures
All loans are to be submitted to the Insurer for approval. If a transaction is not submitted or is rejected it is deemed not covered.

Cost of scheme
The Credit Insurance schemes, plans, and programs are really costless to the lender as all premiums are indirectly paid up in advance by the borrower.

Costing
The cost is expressed in one single rate applied once, in advance, on the total value of each and every loan.