When you take out a loan, you rarely think about what can happen during the repayment. Because everyone first assumes that income and health remain stable. But in life everything does not always go the way you want it to. There can always be incisions of the unpleasant type.
Especially if a serious illness comes into being unexpectedly and even ends with death, this can have very unpleasant consequences for the loan. Because the surviving dependents or heirs would then have to continue paying the loan. Above all, if the loan amount was very large and the remaining debt still has to be paid for many years, this may hit the bereaved very badly. Because they not only lost a loved one, but also inherited their debts.
Many banks are therefore pushing for good hedge protection. Because they know that if the borrower dies, they will always encounter problems when it comes to paying the remaining debt. A loan with death insurance is therefore always sought for large loan amounts.
When does a loan with death insurance make sense?
If you are also faced with the question of how you can best secure your planned loan, you should heed the following tip.
A loan with death insurance only makes sense if it is a large loan with a long term. You do not have to hedge small loans, consumer loans or a car loan in this way. Because a small loan is quickly settled even in difficult situations. And all other loans are earmarked where the things financed are simply returned if necessary.
On the other hand, you should always hedge large installment loans or real estate loans well. A loan with death insurance is worthwhile here in order not to make life difficult for your relatives unnecessarily. Even if no one assumes that you will die during the repayment of the loan, it is always a good thing if the worst-case scenario has been properly taken care of. Because in the worst case, you would not like to see your relatives lose not only you, but also their home, or be driven into bankruptcy.
This should be borne in mind
A death insurance, which is often included in a life insurance or residual debt insurance, is of course not free of charge. But on the contrary. The monthly fees for this are relatively high. If the hedge is taken out directly from the bank, the fees are based on the monthly loan installment. As a rule, the repayment of the loan is then extended.
However, we recommend that the protection be taken out separately from the loan. This gives you the opportunity to search specifically for cheap offers and does not have to accept what the bank suggests. Sometimes this can save a few dollars. You can also directly determine who is the beneficiary of the insurance and design it according to your specifications. Parts can be taken out or added. On top of that, the sum insured can be determined yourself. All in all, you would drive cheaper if you take out the insurance yourself and do not rely on the bank for this.
By the way: Use a comparison calculator when looking for a suitable loan and insurance. You save a lot of time, are always presented with the best offers and can act in peace from your home sofa.