What is the difference between credit life insurance and life insurance?

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The main difference between credit life insurance and life insurance is the purpose of the indemnity and the target audience

Both are policies that look after the life and financial conditions of the holder and his beneficiaries, including claims for similar events.

However, traditional life insurance is aimed at dependents, and does not have criteria for using the indemnity.

Difference between credit life insurance and life insurance

Meanwhile, the credit life modality is initially aimed at paying the debts listed in the contract. This means that a large part of the capital or even all of the capital is returned to the creditor institution, and not to the beneficiaries.

Credit life insurance: Understand what it is, benefits and if it’s worth it!

Although it is an instrument of protection for your family, it is intended to help you settle debts that cannot be paid in a given situation.

How to receive compensation in credit life insurance?

Redemption of credit life insurance must be done directly with the institution responsible for contracting.

This means that if you contracted with the bank or the borrower, when it is necessary to request the redemption, you must look for that company and follow the protocols they establish.

For those who contract this service with an insurance company, just get in touch and report the claim, with all the requested documents, to file the claim.

Generally, the time for evaluation and payment takes up to 30 days, after delivery of all documentation. However, this may vary by institution.

In addition, at first, the money released goes directly to the institution holding the debt, to carry out the necessary settlements. If any amount remains, your dependents can receive it freely.

Since the compensation process varies by institution, it is important to make sure you have all the documents, including:

  • claim record;
  • document proving the identity of the beneficiary;
  • debt contract in question.

Presenting all these vouchers and the other documents requested in the general conditions of the product, can speed up the payment, made in the bank account registered when closing the agreement.

Precautions when taking out credit life insurance

Despite being a service that provides more peace of mind for you and your family, there are some precautions when taking out credit life insurance.

This is because this service can also be used as a pretext for fraud and financial scams in people who seek more comfort for their loved ones.

Institutions with bad intentions to demand mandatory contracting, even if it is not, as in the case of loans or credit cards. This practice constitutes a crime, and if the company requires this additional payment for services that they do not need, be suspicious.

In addition, as it is often charged with the monthly fee for the service in question, many people may fail to pay attention to complying with the proposal.

That is, they do not evaluate the clauses promised by the company, and may have problems when requesting redemption.

In that case, it is essential to know what you are hiring, and what are the conditions to receive compensation and not have problems with your debts.

So, try to read the policy carefully and observe all the details, such as the amounts charged in the monthly fee, the total indemnity and when you or your beneficiaries can redeem it.

This will avoid some headaches and bureaucracy that end up with the tranquility you seek with credit life insurance.

Is credit life insurance worth it?

If you’re looking for more protection for yourself and your family, it’s worth considering credit life insurance.

We know that unforeseen events happen, but you don’t have to undermine your dreams and goals for fear of not being able to meet your obligations.

With this modality, it is possible to have more security in the future, in addition to being able to plan with more confidence to achieve your goals.

In addition, it is an easy coverage to take out, as long as it is with a reliable insurance company and does not have many bureaucracies.

By taking proper care and planning your contract with someone who understands the subject, you won’t have to worry about situations that prevent you from paying your installments.

Therefore, be sure to find out what credit life insurance is and how it works, as this service can provide more security for your family, without having to deal with debts, collections and defaults.

Credit life insurance frequently asked questions (FAQ)

How to receive compensation from credit life insurance?

It is possible to redeem credit life insurance in case of claims covered by the contract. Including, it is not necessary that they are fatalities, such as death, to have access to compensation. Just get in touch with your insurer or institution that issued the policy.

When can I receive credit life insurance?

Credit life insurance can be requested, according to the coverage contracted, in the event of the death of the holder, responsible for the debt installments, as well as permanent disability, illness or unemployment. That is, situations that compromise your main income.

Can I cancel credit life insurance?

As it is an optional service, credit life insurance can be canceled at any time. However, as this insurance is indicated for a debt incurred with a financial institution, it is automatically canceled when the debt is fully paid by the customer.

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