Credit protection insurance (or bancassurance) is an insurance policy you from a bank when getting a mortgage, a small loan or a credit card. It is a valuable policy, as it offers protection in case of death, illness or job loss.
But are you getting the most out of it?
Take a look at some issues we have identified and bear in mind some simple tips that can help you make the most out of your credit protection insurance.
In a recent study, EIOPA looked at how credit protection insurance (CPI) products sold via banks work in Europe. While the study confirmed that CPI products provide multiple benefits, we also identified some consumer protection arising from:
- limited product choice and barriers to shopping around
- difficulties in comparing products
- challenges with cancellation and switching
- lacking consumer preferences in product design
- issues with sales practices
Take a look at our video on the right-hand side to learn more.
What should you do to get the most out of your credit protection insurance?
Credit protection insurance comes into play after big decisions, such as taking out a loan or buying a mortgage. Your primary focus on the credit products itself may mean that you are not paying adequate attention to the characteristics and the impact of the additional product (CPI).
You may also find it difficult to effectively process the information on the CPI given by banks together with the already complex information on the core product. CPI products are complex and you may not be able to assess well the value of the product.
And sometimes you may find it too time-consuming to shop-around for alternative or better suited CPI product or tied/bundled packages (core product with CPI).
It is therefore important for you to follow these key steps:
- shop around to find the best deal
- carefully read the terms and conditions of your insurance policy
- understand what you are covered for and what you are not covered for (exclusions)
- check what cancellation policies apply