Do you know what credit life insurance is ? This is a product that you can even say you don’t know, but there is a great possibility that you have already used it. Or, have been benefited in some way.

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Very common in the financial market. However, its nomenclature is still unknown by some people.

In the past, only legal entities could contract. However, today you as an individual can also have it. 

Credit life insurance is credit insurance that covers the contractor’s debts in cases of death, disability or loss of income.

Be it a personal loan or to buy a property, for example, at some point during the credit opening you may have been informed that, in the event of death, the insurance pays your installments. It was about this type of insurance that he was referring to.

If the subject is interesting to you, read our article until the end, and you will know in detail the importance of having a credit life insurance.

Good reading!

Credit life insurance, how does it work?

The proportion that your coverage is being popularized grows along with your demand. Every day more Brazilians are aware of its importance, and this increases the hiring of this product.

In terms of coverage, credit life insurance offers the same conditions as the traditional life insurance you already know. See below:                                                                                         

  • Coverage in case of death;
  • Invalidity;
  • Reimbursement of hospital expenses;
  • Per diems for temporary disability;
  • Among others.  

The main difference between credit life insurance and traditional life insurance is that it pays off debts in the event of death. Here is the great attraction of this type of insurance. 

What a lot of people don’t know is that in case of death, the family can have a big bomb in their hands. The absence of this type of insurance causes the debts to be collected from the estate. I will address this issue further below.

Is there debt inheritance?

An issue that takes many by surprise in a moment of pain is to face debts that they did not know they would have to pay. And after all, after a person dies who pays their debts?

A very big scare for bereaved families is when, at the time of the loss of a loved one, they have to face the debts left behind. This causes a lot of headache for the heirs.

The Civil Code, in article 391 and article 597 of the Code of Civil Procedure , makes it clear that there cannot be inheritance of debt. In this way, heirs cannot be charged for debts they did not incur.

However, when these debts are very high, there may be a charge directly from the estate left to the heirs, which is called the estate. Do you understand what can happen?

The estate consists of all assets and rights. However, it also includes obligations. All this forms the estate of the deceased. 

The complication can be greater. If the debts are smaller than the assets, there will still be a balance to be divided by the heirs. However, if the debts are greater, their discharge can subtract all assets.

When someone thinks about protecting their heirs, the first action that comes to mind is to take out life insurance, and since death is not presumable, situations like the ones mentioned above are common to encounter. So how to prevent yourself?

Credit life insurance is the safe option to know that your loved ones will be protected from this type of problem at the end of their lives. 

However, another advantage is that it can be used in LIFE. That’s right in life!

See below.

Credit life insurance: disability or involuntary unemployment

If you were already happy with the novelty of being able to protect your family even more, how about knowing that in some situations your credit life insurance can settle your debts, even in life.

Credit life insurance is quite flexible, and may provide for the amortization of the debt up to the limit of the insured capital in the event of death.

However, there is also the possibility of being able to use it in life, when the policy says that the coverage also serves in cases of: disability or involuntary unemployment of the contractor (or loss of income of the self-employed).

By contracting this modality, the insured person is entitled to liquidation or amortization of debts involving financing, credit operations, or leasing.

 In addition, it solves various types of financial problems. as: 

  • Overdraft payment; 
  • Paying off credit card debts; 
  • Settlement of loans with financial institutions; 
  • Amortization of balances related to consortia; 
  • End of debts involving payroll loans (thus, there are no losses in the payment of any pensions); and 
  • Coverage of open balances in installment plans or financing of goods. 

It is important to know that you do not need to have two types of life insurance, as the credit life option can be an addition to your traditional life insurance .

As mentioned above, the fact that you are not familiar with credit life insurance is that it was previously used only to protect credit companies. Therefore, in credit companies, this insurance is usually included in the effective costs of the loan.

Difference between credit life and traditional life insurance

Credit life insurance is not directed directly at heirs. This is the most divergent point between the two. Thus, in fact it works as a credit protection for the contractor.

In this way, in its central objective, it solves the debts of the contractor with its creditors.  

We conclude by saying that this article was an alert for those who did not know the subject.

We know that patriarchs love their descendants. At certain stages of life, these parents only work to support their heirs. Therefore, having credit life insurance is part of this care, and is, above all, an act of love.

Credit life insurance: disability or involuntary unemployment

If you were already happy with the novelty of being able to protect your family even more, how about knowing that in some situations your credit life insurance can settle your debts, even in life.

Credit life insurance is quite flexible, and may provide for the amortization of the debt up to the limit of the insured capital in the event of death.

However, there is also the possibility of being able to use it in life, when the policy says that the coverage also serves in cases of: disability or involuntary unemployment of the contractor (or loss of income of the self-employed).

By contracting this modality, the insured person is entitled to liquidation or amortization of debts involving financing, credit operations, or leasing.

 In addition, it solves various types of financial problems. as: 

  • Overdraft payment; 
  • Paying off credit card debts; 
  • Settlement of loans with financial institutions; 
  • Amortization of balances related to consortia; 
  • End of debts involving payroll loans (thus, there are no losses in the payment of any pensions); and 
  • Coverage of open balances in installment plans or financing of goods. 

It is important to know that you do not need to have two types of life insurance, as the credit life option can be an addition to your traditional life insurance .

As mentioned above, the fact that you are not familiar with credit life insurance is that it was previously used only to protect credit companies. Therefore, in credit companies, this insurance is usually included in the effective costs of the loan.

Difference between credit life and traditional life insurance

Credit life insurance is not directed directly at heirs. This is the most divergent point between the two. Thus, in fact it works as a credit protection for the contractor.

In this way, in its central objective, it solves the debts of the contractor with its creditors.  

We conclude by saying that this article was an alert for those who did not know the subject.

We know that patriarchs love their descendants. At certain stages of life, these parents only work to support their heirs. Therefore, having credit life insurance is part of this care, and is, above all, an act of love.

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