
Due to the difficult economic situation it is thinking about the different ways to protect from an unexpected loss of work or expenses, related with health problems. One of these ways is insuring
the payments of a credit. Shot illustrative. Photo: Shutterstock
With the difficult economic situation, it’s worth thinking about different ways to protect against unexpected job loss or expenses related to health issues. One of these ways is
insurance of the payments of a loan.
Director of Coop Kindlustusmaakler Raivo Piibor explains what it is and who this solution could be suitable.
While housing insurance is today already accepted as something that is implied, the benefits of insuring the payments of a credit are only recognized in the last years.
It is important to distinguish between different types of insurance: While housing insurance protects against damage to the home or the property within it, the insurance of the payments of a loan protects the person himself.
For example, Payment Insurance on credit will help in the case of firing or if the employer has substantially breached their obligations under the contract, which caused the employment contract to be terminated. It is also helpful if the insured person has lost the employment because of an illness or an accident. It is important that the health problems be proved by medical documents or diagnostic tests.
The only oneAn unforeseen situation could severely disrupt the budget
The Payment Insurance on a loan covers the basic amount of monthly payments and interest. Although the cost of insurance and the specific conditions depends on the agreement of the loan and the policy the customer has signed, Coop Coop Pank can say that insurance allows to cover the payments of a loan of up to 1500 euros.
Compensation is payable within 12 calendar months after the termination of the liability, which allows to avoid expenses of up 18 000 euros. In order to receive the compensation, the insured person must either be registered with the unemployment fund or have a proven temporary incapacity for work.
Statistics demonstrate that the primary causes of financial hardship are loss of work and temporary health problems. This is especially notable in difficult economic periods. According to Department of Statistics data, the unemployment rate in the third quarter 2024 of the year was 7.4 percent. Compared with the previous year the number of unemployed increased by 1500 people.
It is well known that every person should have a so called “peace-of-mind fund” savings that cover at least three months’ expenses. Ideally, these funds should be divided between term and savings in deposits, so that they will earn interest over time and increase in size.
But not everyone has savings, and sometimes they may just not be enough. For example, a person doesn’t find a new job, or the loss of employment is delayed, but without insurance, the payments on a loan, running up thousands
Who is needs to pay.
Who is suited to insure the payments of a credit?
About insurance payments on credit is to consider everyone who works for hire and wants to protect from unexpected circumstances. This is especially important for those who have no or too little savings so that in the event of a loss of income, they won’t have trouble paying their loan.
It is also important to consider the probability that the business where you work could financial trouble, which would lead to downsizing or even closing the business. The most often these risks are higher in start-ups or in firms already experiencing financial problems.
For many people the biggest monthly cost is the housing credit, so its insurance is especially important. If you can still save money on other expenses, the roof over your head must remain forever. For example, with a monthly payment on a credit of 300 euros, the insurance cost will 10.5 euros, and the maximum amount of compensation will be 3600 euros.
It should be taken into account that the insurance does not cover cases where the contract of employment is terminated by agreement between the parties, if the term of the labor contract has expired or if the process of terminating the contract began before the insurance policy becomes in force.
Parents need to remember that compensation for temporary disability can also be received in an illness or an accident, occurring to a child under the age of 18, conditions that the Disability List has been submitted to and approved by the Health Office.
Insurance of payments on a credit creates a majorassurance that in the event of loss of income or the occurrence of unexpected health problems the credit liabilities will not>be outstanding and no debt to the bank will arise. Therefore, in addition to housing insurance, it is worth considering and the insurance of credit.