Credit Life Assurance Scheme
This insurance plan provides cover for the payment of an outstanding loan on consumer durable goods like; household items, electronics etc. The financier takes steps usually centered on the moral hazard of possible default but the mortality risk associated with death can also be covered with a credit life insurance.
- This is a policy that provides for the payment of an outstanding loan in the event of the occurrence of the death of the policy holder.
- This consumer loans covered usually do not require any form of collateral, although a steady source of income is usually a criteria for eligibility.
- On death after the guaranteed period no further payment will be made.
- The product is designed to secure consumer loan holders against the financial risk of death/critical illness before repayment of amount owed.
- Loan covered by this contract is short term consumer loans with minimum term of 6 months and Maximum term of 4 years.
- The policy duration will be equal to the term of the loan taken subject to a minimum of 6 months. The maximum age at entry will be 60 years.
- The Sum Assured under the contract is the original loan amount taken from the financial institution.
- There will be no medical examinations for Sums Assured below N5, 000,000.00.
- Only single and annual premium payment is allowed under the contract.
- In the event of the death/critical illness of the loan holder within the policy term, and before completing the loan repayment the loan outstanding (at the date of death/critical illness) becomes payable to the financial institution thereby restricting the financial institution from assets repossession / sales.
- The policyholder will have the option of adding Loss of Job Benefit.
- The product does not attract any surrender/lapse/maturity benefit.
- The minimum age at entry is 20 years while the maximum entry age is 60 years.
- The maximum age at maturity is 65 years.
- The financial institution is the first loss payee.
- It serves the purpose of protecting policyholders’ dependants from the financial consequences of the inability to repay the loan outstanding as a result of the death/critical illness of their breadwinner.
- It protects the dependants from the anger of financial institution in case of default thereby restricting the financial institution from assets repossession / sales.
- It gives peace of mind to the life assured.