Family members, next of kin and/or beneficiaries are shielded from having to repay a loan or losing an asset in the event of a borrower’s death or total permanent disability. This gives confidence in borrowers that the lender has taken care of their welfare too.
- The lender/financier is shielded from having to follow up on a non-performing loan in the event of a borrower’s death or total permanent disability.
- As an incentive for attracting and retaining borrowers. Borrowers prefer to borrow from lenders who have prearranged insurance with negotiated terms and rates of premium that are affordable and easy to manage.
- Affordable premiums. The unit rate applied for all members of the scheme results in a premium rate far less than any borrower would pay to access such benefits individually.
- Less rigorous underwriting requirements. Only a few members of a scheme are subjected to a medical examination
- Protects against the risk of death and permanent total disability arising from both sickness and accidental causes.
- Does not exclude passive war, riots, and terrorism risks, COVID or HIV.
- All loans are covered on reducing balance basis. This means that the loan balance at the date of the event is paid out once fully documented and verified.
- The cover can either run full term or can run annually in which case it is renewable each year upon expiry.
- Does not cover loan default.
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