The corona virus pandemic named COVID-19 has led to loss of Jobs worldwide. Media outlets have been filled with news of increased number of people filling for unemployment benefits. People in developed countries have already adopted this type of insurance. You surely need it. Creditor insurance provides insurance for the regular repayments due under, for example, a mortgage, bank loan or credit card, in the event of unemployment, accident or sickness. It is also known as payment protection, mortgage protection and consumer credit insurance.
There are many types of creditor insurance and cover may vary significantly between policies and companies that offer this insurance.
Creditor insurance cover is provided under two main sections:
- Unemployment and accident and sickness cover, which pays a monthly benefit if the insured becomes unemployed or is prevented from working due to accident or illness. There is usually a waiting period, which may take the form of either an excess or a franchise depending on the service provider. In the event of the permanent total disablement of the insured, the policy will pay the outstanding balance of the loan or credit card
- Life insurance cover. In the event of the insured’s death the policy will pay the outstanding balance of the loan or credit card at the date of death.
Insurance companies apply Limits each section of the insurance cover.