Credit alone or with extras?
When applying for the loan itself, we often forget about the additional costs, which are not only interest or handling fees, but also about the additional costs, which is additional credit insurance. In some establishments this insurance is compulsory, and in some it is an additional option. So how do you check whether this option pays off and how to complete the formalities when applying for a loan?
What to look for
First of all, if you are familiar with the banks’ offers, you should check whether the offer has compulsory or voluntary insurance. This is important at least because of the costs that increase if you buy the variant, which is insurance. Another issue is what this insurance covers. In most cases, the list of diseases covered is not long and precisely defines the diseases in which insurance is valid.
Most often, they include a heart attack, stroke or oncological diseases. When deciding on credit insurance, it is worth knowing that it does not take full responsibility for the financial liability – the only case in which we are completely exempted from paying the loan is life insurance. Another point worth mentioning in the case of credit insurance is insurance to protect us in the event of job loss. When deciding on such a step, it is worth paying attention to details about such issues as the debt limit or detailed guidelines that must exist for insurance to be active – this is mainly the way you lose your job. When talking about credit insurance, the most important thing is to get to know the details of the insurance itself, the costs associated with it, as well as situations in which insurance may be useful to us. If we decide on this option, all formalities should be completed.
How to complete the formalities
Credit insurance formalities can be basically divided into two groups. In the first of these, insurance is a compulsory part of a loan, so we sign a contract for its use with a loan contract. The second way to buy insurance is to buy it separately, for which you will need a separate contract. Regardless of the way you get insurance, you should be aware of the additional costs we incur in connection with the loan.
Advantages and disadvantages
One of the disadvantages of credit insurance are the costs that we additionally incur in connection with the loan. We often don’t feel it when paying monthly installments, but the overall statement shows the difference coming from the extra expense. The advantage of this option is help in emergencies such as illness or job loss. Such cases are specified in detail in the terms of insurance, so before buying it, you should read the terms in which insurance will help us. The insurance option can help us in unforeseen situations, so you should consider this option. An analysis of the loan itself and our repayment options will help us make the decision.