What is loan protection insurance:-We all take out insurance throughout our lives. Either by obligation, such as civil liability, or by precaution. An investment in risk prevention. And there are insurance of all kinds. For example, insurance is marketed in the insurance market whose objective is to guarantee that, during the period of validity of the insurance, the debtor will pay the amounts derived from a loan, whether mortgage or otherwise. They are known by the trade name of “payment or loan protection insurance”, and are usually marketed independently or as additional coverage of other insurance linked to the loan.
What is loan protection insurance?
When a client requests a loan and is granted, it is because he has been able to prove his ability to repay the loan plus interest arising from the operation. However, it is impossible to guarantee that this capacity will continue over time. The client’s personal or professional circumstances may change, and that is a risk that runs both the insured and the insurer. And for this there are payment protection insurance, which covers the contingency of unemployment or the temporary disability of the insured (borrower of the loan).
It should be noted that unemployment and temporary disability coverage are conceived as alternatives. That is, the insured can only use one of them; The insured is not granted a power of choice on the type of claim covered, but it is the policy, depending on the insured’s employment situation at the time of the incident, that establishes the guarantee that operates.
In the event of the worst circumstances and the client lost his job or his ability to do it temporarily, the insurance company will pay the loan installments to the credit institution. This will occur during the aforementioned situation, and according to the temporary and quantitative limits agreed in the policy at the time of hiring. The insurance can establish Thus, the insured capital usually establishes either a maximum number of loan installments and up to a maximum amount, or a total coverage. In any case, the beneficiary of the insurance is the credit institution of the loan.
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