Insured loans – yes or no?

Loan insurance is an additional cost generated by our loan. However, are there any benefits to payday insurance? Who earns on insurance and will the loan insurance really pass us by?

First, let’s explain what loan repayment insurance really is. Insurance covered by loans is life insurance: if the borrower dies before repaying the amount borrowed, the insurance company will cover the person’s liability to the loan company, which means that the debt does not pass to the deceased’s family. The entity authorized to receive money in this case is only the company that grants payday loans, it is de facto insured and it holds the policy. This practice is nothing new in the financial industry – banks have been offering cash or loan insurance for years, not only in the event of the borrower’s death, but also in the event of him losing his job.

 

Insurance costs

Insurance costs

The company that makes it earns on the insurance of the loan: it receives a commission from each insurance, which with its hidden income – hidden, because the customer does not officially pay the commission or the so-called preparation fee, but it really pays off the company’s profit, which results from separate agreements between the lender and the insurance company.

Among the loan companies we find both those that use payday insurance and those that do not require it. In the case of the former, the amount of insurance is approximately 15-20% of the loan taken.

 

Insurance and loan agreement

Insurance and loan agreement

Loan insurance is accepted when the loan agreement is concluded. On the website of loan companies should be available rules of insurance of payday loans, which clearly describe the rights and obligations of the borrower under insurance, all its instructions and – what is very important – the so-called. exemptions, i.e. a list of situations in which the insurance company will not pay benefits. Especially this part of the regulations should be read carefully, because it may turn out that the scope of exclusions is so wide that you will not be able to receive any money from insurance. In the case of loans concluded online, to accept payday insurance, all you have to do is tick the appropriate box on the form (i.e. put the tick in the appropriate box).

 

Withdrawal from insurance

Withdrawal from insurance

Borrowers may want to withdraw from the insurance because after a while they state that in this way they will reduce the additional costs of the loan. According to the Insurance Act, each insured has the right to withdraw from the insurance contract and if the premium was paid, the insurance company should pay the client the premium due, adequate to the unused period. In practice, loan companies do not give up insurance in which they hide their margin. Therefore, the lenders protect themselves against such customer traffic, stating in the contract that in the event of resignation from the loan repayment insurance, the borrower must either repay the entire sum immediately incurred, or show several guarantors, or the loan interest rate increases significantly. In this way or so, the resignation from insurance becomes completely unprofitable for the client.

 

Insure a loan or not?

The final decision on whether to insure a quick loan or not should be influenced by the amount borrowed. With a low amount, the insurance offered by some companies is so high that borrowing money just makes no sense at this company. However, the higher the amount, the better the insurance becomes. On the one hand, loan insurance is an additional cost, but on the other, thanks to this solution, we can somehow help our loved ones in the event that the darkest possible scenarios are fulfilled.

 

Liza Loolittle and loan insurance

loan insurance

Unlike other companies providing online long-term installment loans, Liza Loolittle does not require loan insurance. The obligation to conclude an additional agreement is not obligatory. To obtain a loan, it is not necessary for the customer to conclude another additional contract, in particular an insurance contract or other contract. This is a very convenient solution because it does not impose additional costs on the client interested in the loan. All costs incurred by the borrower when using the services of Liza Loolittle are included in the table of fees and commissions   and on the home page in the virtual calculator. The calculator presents the APRC, the interest rate on the loan, the amount of the administrative fee per month, the preparation fee, interest on the loan repayment, the amount of the first installment, and the total loan amount as well as the total repayment amount. Liza Loolittle is guided by the principle of transparency of the offer. No additional costs are hidden.