Revolving Credit InsuranceUncategorized
Revolving credit insurance, or permanent credit, is not mandatory. But to the extent that the money paid back is still available, it is wise to protect yourself if the credit is spread over time.
The peculiarity of a revolving credit
The borrower has a sum of agent to use as it sees fit, partially or totally. Repayed monthly payments gradually replenish borrowed capital, which can be reused at any time.
The insurance offered in the revolving credit offer
The banking organization may require insurance coverage in its revolving credit offer, like any other form of loan.
It remains optional under the law. However, if the borrower refuses, the credit may be denied. In this case, he has the option of choosing another insurer. The banking organization is also obliged to offer a delegation of insurance. For this purpose, he must inform him by means of a notice stating:
- – the proposed guarantees;
- – the excluded risks;
- – the name of the insurer;
- – the duration of the contract.
Guarantees generally required are death and disability. In the event of an accident of life, the insurer takes over the credit, totally or partially according to the guarantees subscribed. The borrower therefore has every interest in insuring himself and his family against a possible inability to pay his monthly payments.
Optional guarantees can be added depending on the borrower’s profile, such as the job loss guarantee. Generally, only the dismissal giving entitlement to an unemployment benefit is covered. Compensation comes after a waiting period and for a fixed period.
The cost of a revolving credit insurance
The amount of credit insurance varies from one insurer to another. It is between 0.2% and 0.6% of the borrowed capital.
The cost of insurance must decrease over the monthly payments to reduce its impact on the duration of the credit. Indeed, the monthly repayment of the revolving credit remains unchanged. In contrast, the amortized capital is reduced by the cost of insurance, so the loan will take longer to repay.
Age requirements are also required: in general, you must be under 75 at the time of purchase.