Collected in some operations, credit life insurance is a resource that can be used to settle the outstanding balance of a debt, in the event of an eventuality. However, what many people do not know is that their membership is not mandatory. Especially in the case of contracting the payroll loan.
Still in doubt? Understand what credit life insurance is, in which cases it is indicated and how to know if you are paying for it or any other insurance when taking out a loan or not. Check out!
What is credit life insurance?
Credit life insurance is a device created to ensure that a debt is paid even without the contractor’s compensation. In other words, this feature can be used in situations where payment is delayed, interrupted or stopped. It is commonly sold as a financial protection and can be used by the insured (or responsible) in cases such as:
- Temporary or permanent disability;
- Involuntary unemployment;
- Loss of income;
This type of guarantee has become a very important practice for finance companies and customers since it offers some security in relation to the settlement of the debt, usually associated with the acquisition of a good, financing or leasing.
On one side is the company that granted the credit and, with the signing of the credit life insurance, you can receive the contracted amount from the insurer. On the other hand, contractors (consumers) are guaranteed that the good, loan or financing will be paid.
This, even if there is a case of loss of income, caused by accidents that result in disability or even a case of death, for example. Therefore, there is no risk of default or legal action by legal financial companies to recover the acquired asset. After all, credit life insurance guarantees the settlement of the debt or the amortization of the same.
In which cases is credit life insurance indicated?
Credit life insurance is indicated for people who, unlike the payroll loan public, do not have job stability or fixed income. The exception here is for workers in private companies who can also hire payroll deductible credit or credit cards.
In addition, contracting insurance is a prudent action for those who work in areas of risk in their professions. It is important to take into account the probability of suffering an accident at work, for example, which culminates in serious consequences such as disability or death.
In this case, the insurer assumes the debt, reimbursing the creditor of any losses due to default. Therefore, it is not necessary to return the goods. With instability in the labor market, jobs in private institutions can also threaten workers. In this sense, credit life insurance is a safe alternative to guarantee the overdue installments of those who involuntarily lost their job.
Is this insurance mandatory?
The answer to that question is: no. Credit life insurance is a mandatory item only when it involves the purchase of furniture and real estate. That is, real estate financing or leasing contracts may contain specific clauses that require the contracting of this service.
Because it is a long-term operation and because it is more expensive debt, institutions understand that these operations offer more risk of default. Therefore, unless there are no contrary provisions, the use of credit life insurance is mandatory.
Know some financial operations, in which insurance can be contracted:
- Loans from finance companies and banks (valid for individuals);
- Credit card;
- Financing of goods (real estate, vehicles, appliances, etc.);
- Payroll-deductible loans.
However, it is worth noting that the loan and credit card must be treated differently.
Is it possible to take out a loan without insurance?
The answer to that question is: yes. As explained in the previous topic, credit life insurance is not a mandatory condition for those who wish to apply for a credit line, either through the use of a credit card or personal loans.
Before deciding whether to optionally contract the insurance or not, the interested party must observe the coverage offered, claims accepted and what will be the weight in the budget due to the increase in monthly installments.