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If a borrower dies, informal lenders usually try to collect outstanding loans from his or her relatives. Claims on outstanding debts are often hard on relatives who are faced not only with the cost of a funeral but also the loss of a household income earner. In extreme cases, if the borrower’s relatives cannot pay back the loan, they might have to work for the moneylender to pay off the debts.
Similarly, in the case of credit disability, when a borrower becomes permanently incapacitated to the extent that he can no longer conduct his business, the outstanding loan will be written off.
Eligibility:
Only borrowers of the bank are eligible for this policy. The type of facility will be limited to loans where the outstanding sum owed reduces as the tenor increases and not overdrafts were the whole facility may be outstanding at any point within the tenor of the facility.
Waiting Period:
There will be no waiting period for this policy. Once the borrower accesses the facility, the policy comes into force.
Term:
Same as the tenor of the facility.
Savings:
Compulsory savings on group lending will apply.
Sum Insured:
The sum insured is the outstanding loan amount.
Premium collection method:
The premium will be integrated into the lending process. The entire premium will payment will be charged as an upfront payment as the loan is been disbursed. This is to ensure that the borrower is always covered.
Servicing the product
When an insured person suffers the loss for which she is insured, the bank will investigate in order to satisfy itself that the death has actually occurred before writing off the outstanding facility.
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