Is loan insurance mandatory? In which cases is it optional? Loan insurance is a measure that allows the debtor to benefit from a protection against circumstances that could jeopardize the repayment. Let’s clarify when it is needed.
The problem in the eyes of many consumers is to understand if and when loan insurance is mandatory and in what circumstances it is actually beneficial.
The most frequently used form of insurance protection is the CPI, or Credit Protection Insurance. This is stipulated and paid at the same time as the loan, so it is a factor that makes up the monthly installment.
In certain circumstances, however, the insurance company may demand full payment of the policy in advance.
How does the ICC work? It is a policy that intervenes in the reimbursement against a series of circumstances, that is, if the debtor falls into one of the following situations:
The insurance intervention is triggered only if the circumstance is fully documented.
But let’s get to the central element of our article: is loan insurance mandatory? Loan insurance is usually mandatory only if the loan is a transfer of the fifth.
In the other loans, insurance is optional, although credit institutions may request the underwriting of the policy for the loan to be granted. This depends on the applicant’s profile and the bank’s policies.
If the figures involved in the loan are substantial, an insurance policy can be a valuable and in the long term convenient resource.
It is fundamental to evaluate one’s income and assets and therefore to consider the repayment capacities. If the risk of a non-refund is considered probable, it is advisable to activate the insurance.
If you want to activate optional insurance, it is useful to consider costs in advance. As regards the CPI, it may be convenient to compare the various APRs, provided, of course, that they also report the impact of the policy.