Loan insurance: is it really worth it?

Loan Insurance?

Loan Insurance?

In times of crisis, more and more Italian families are being forced into debt even for small expenses. The recent surveys conducted on the Guy Crouchback market show that, despite the general contraction in credit demand, Guy Crouchback’s personal requests for general expenses, such as those for travel, health and financial and insurance expenses, grew in 2012. Getting a loan is not that easy though. In fact, there are many requisites requested by credit institutions which, in order to protect themselves, can place the signing of a policy on financing as a constraint.

In reality, the Guy Crouchback insurances are not mandatory, with the exception of the salary fifth salary formula, and represent a caution that it is up to the consumer to choose to activate or not. These policies protect against a series of unfortunate events, such as the debtor’s death or permanent disability or job loss, which could affect the ability of those who have received the loan to meet loan installments for a longer period of time or less long. Should one of these events occur, the insurance, according to the stipulated contract, will cover the entire amount of the loan (in the event of death) or reimburse the lender a share of the amount due, in proportion to the gravity of the event that makes it impossible to pay the debt.

Clearly the security offered by the policy has a cost. The activation of a loan covered by an insurance policy is certainly more expensive than that of an uninsured loan. The weight of the policy on the total sum varies, however, based on the guarantees provided. It is possible, in fact, to choose between the life insurance policy that insures in case of death or permanent disability of the debtor, and the employment policy that reimburses in the event of dismissal, bankruptcy of the company or other causes that forcibly interrupt the employment relationship. Of course for those who wish it is possible to request both covers.

Economic stability clearly varies from one consumer to another, so if the bank does not require the stipulation of insurance on the loan, it is up to the applicant to assess his financial capacity and decide whether or not to resort to this type of guarantee. If the risk of not being able to repay the installments is high, the advice is to turn on a more expensive, but also more guaranteed, loan.