Credit insurance. How to insure a loan and not plunge into even greater debt? Consumer loan - do you need insurance?
From June 1, 2016, new rules apply in Russia voluntary insurance, which also apply to loan insurance. The question of whether it is possible to refuse insurance on a loan after receiving it has worried borrowers before, but after the innovation the situation became even more confusing.
In this article, we will together understand the current situation, and you will also receive detailed instructions on how to refuse credit insurance. If you do not want to understand the intricacies of the law regarding the return of insurance, we recommend that you use a simple test - it will show whether the return of insurance is possible.
Test: Find out if you can get your loan insurance back
The legislative framework
The activities of banks and insurance companies are regulated by laws. The relationship between clients and the bank is regulated by an agreement, and it is regulated by law. According to the instruction of the Central Bank of Russia dated November 20, 2015 N 3854-U, insurers are required to provide for the possibility of refusing voluntary insurance within 14 days after the conclusion of the contract. This instruction also applies to loan insurance.
According to this instruction, which fully came into force on June 1, 2016, clients have the opportunity to terminate the insurance contract.
This is possible if no more than 14 days have passed since the conclusion, and also if no insured event occurred within these 5 days. Please note that the period of 14 days is not considered calendar days
This period is in no way tied to the payment of insurance; it is counted precisely from the date of conclusion of the contract. Therefore, if you entered into an agreement, but paid only after 13 working days, then you only have 1 working day left to terminate. The decree of the Bank of Russia was registered with the Ministry of Justice under number N 41072 dated February 12, 2016.
Insurance companies were provided Grace period, within which insurers could prepare for innovation. On June 1, 2016, the innovations fully came into force. According to this decree, the insurance company is obliged to terminate the contract and refund the money within 10 days. The refund amount is 100% of the amount paid, but minus those days when the client was insured. For example, if you cancel insurance after 3 business days, you will be refunded the full amount paid for insurance, minus the cost of three days of insurance. Insurance is regulated by 935 articles of the Civil Code of the Russian Federation. It clearly states that life or health insurance is a voluntary matter. 
The law “On Protection of Consumer Rights” is also on the borrower’s side. According to the letter of the law, no one has the right to connect the receipt of one service (loan) with the purchase of another service (insurance). 
If you were forced to take out insurance and were misled into thinking that it was compulsory, then you need to go to court and get your insurance back.
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There is only one exception - insurance for mortgage lending. Therefore, it is important to understand which loan insurance can be canceled and which are mandatory.
Which insurance is required and which is not?
The law states that life insurance is a voluntary choice of the borrower himself. It follows that insurance is optional. Unfortunately, the practice of obtaining a loan differs from what one would expect based on the law.
In practice, it turns out that banks force their clients to voluntarily and compulsorily take out loan insurance. The innovation of 06/01/2016 protects clients, as it allows you to refuse imposed insurance if you manage to do this within the prescribed period. Such imposed insurance most often concerns the following groups of loans:
- Consumer;
- Mortgage;
- Automotive;
Clients are offered life and health insurance, insurance against job loss, property damage, and in the case of car loans, CASCO insurance. All this is done with one goal - to reduce risks for the bank. Insurance allows you to eliminate the risk that you will not be able to repay the loan if one of the insured events occurs. In Russia, insurance is viewed with hostility, but this instrument can also protect the borrower.
Of the entire list of insurances, insurance against loss for purchased property is mandatory. For example, when buying an apartment with a mortgage. In this case, the bank has the right to require you to purchase insurance; this point is regulated by Law 935 of the Civil Code of the Russian Federation and 31 articles of the Law “On Mortgage”. Life, job or title insurance are optional insurances, even if the bank insists otherwise.
Insurance conditions in the agreement with the bank
The terms of loan insurance are specified in your contract. So it's not difficult to recognize them. It is possible that you will not be required to pay separately for insurance, since the bank itself will transfer the payment to the insurance company. The ideal option is if you refuse insurance before you sign a contract. To do this, you need to find out all the terms of the loan before your signatures appear on the documents.
You need not only to ask the bank employee, but also to carefully study the agreement yourself. For example, below is a consumer agreement, according to which the client receives insurance. 
In such cases, you can try to cancel insurance before the conclusion. Only in rare cases will this not affect your credit. The bank may refuse to issue it without explaining the reasons. But the real reason will be that you refused insurance. Another option is that the bank will agree, but will offer you a higher rate. In this regard, the question arises whether it is possible to use the innovation in the laws to enter into an agreement with a bank for favorable conditions, and then cancel the imposed insurance?
Is it possible to refuse insurance?
Thanks to innovations, yes, you can refuse the imposed insurance. The cooling-off period is the name given to the first 14 days after signing the contract. Within this period, you can cancel the insurance contract. Including if this insurance is related to a loan. Banks come up with schemes that try to circumvent the law. For example, a bank might create one common group insurance policy for all borrowers.
In this case, the borrower is not sold insurance; he is simply connected to the collective insurance system. It turns out that in order to terminate the insurance contract, the client needs to “disconnect from the system” of collective insurance, and not directly terminate the contract. The law does not apply to this type of insurance, and therefore the client cannot terminate such insurance. It is expected that other schemes may appear in the future, as banks do not want to put up with these innovations.
How to cancel insurance?
Let's look at a practical example. You have applied to VTB Bank for a loan to buy a car. The rate is 7.9% per annum, but it is only valid if you sign a life insurance contract. If you refuse to take out insurance, you may be denied a loan or offered a much higher annual rate. Having studied all the terms of the agreement, you understand that you need a loan. The terms of the loan are as follows:
It turns out that the insurance increases your credit by 6.24%, or about 2% per year. This turns the real lending rate from 7.9% to approximately 9.9% per annum. According to the loan agreement, your insurer is VTB Insurance, an affiliate of VTB Bank. Let's assume that the bank approved your loan and you signed the agreement on Thursday, December 1st.
From this date you have 14 days during which you can refuse the imposed life insurance. It turns out that until December 17 (inclusive) you can send an application for refusal to the bank. 14 working days begin to be counted from the working day following the day of signing the contract. To cancel insurance, you need to provide the bank with:
- Application for withdrawal from the contract;
- A copy of the agreement;
- A check or other document confirming payment of the insurance premium;
- A photocopy of the policyholder's passport;
You can serve the documents in person, but to do this you will have to visit the insurer's office. Documents can be sent by mail, but must be sent by registered mail with a list of attachments. The first method is better, as you will get back most of the insurance premium, minus the days when the insurance was in force. The coverage ends when the insurer receives your application. After you provide all the documents to the insurance company, compensation will be credited to your account within 10 business days.
Practice has shown that banks delay this procedure and exceed the legal limit of 10 working days. After this period expires, you can contact the insurance company with a new request and control the process. Reviews show that funds are returned within 1 calendar month.
Sample application for refusal of insurance
It is ideal if you contact your insurance company so that they can provide you with a sample application for cancellation of the insurance contract. You can make an application yourself. Be sure to include:
- Your passport details;
- Your contract details;
- Reason for termination;
The date and your signature are also required. You can indicate any reason for terminating the contract, including the simplest one: guided by the legislation of the Russian Federation, I use the legal right to terminate the contract within 5 working days from the date of signing. You can either use the following example of a termination notice: 
What happens to the loan if rejected?
The most common question, which is also the main concern of people, is whether the bank can terminate the loan agreement if you refuse insurance. Of course, your refusal affects the risks for the bank; they increase. But if you have already concluded a loan agreement, then refusal of insurance made in accordance with the law is not a reason for terminating the loan agreement.
It turns out that such a step should not lead to the bank requesting early repayment. There is also an opposite example. Some banks not only do not look for loopholes in the law, they meet their clients halfway. For example, some Sberbank loan agreements contain a condition that the borrower can refuse insurance within 14 days after signing.
Hello, I am the author of this article and the creator of all the calculators in this project. I have more than 3 years of experience working with Renaissance Credit and Promsvyazbank banks. I am well versed in credits, loans and early repayment. Please rate this article, please rate it below.
When issuing a loan, the bank seeks to minimize risks in the event that the financial condition the borrower does not allow him to fulfill his obligations to the bank. Insurance partially solves this issue.
What is loan insurance?
Insurance allows the bank to shift some of the risks to the borrower and the insurance company. The borrower is invited to enter into an insurance contract. The most commonly used types of insurance are:
- Life and health insurance. This can be one contract or several; life and ability to work are insured separately. In the event of the borrower's death, disability or illness, which leads to temporary loss of ability to work until the debt to the bank is repaid, the insurance company will repay the debt to the bank.
- Job loss insurance. In this case, the insurance company protects against cases when the borrower loses his job due to the fault of the employer (downsizing, liquidation of the company). The insurance does not apply to cases of voluntary dismissal.
As a rule, the bank offers to obtain insurance for loans issued according to a simplified scheme, without collecting and analyzing documents. Types of loans for which the borrower may be offered to enter into an insurance contract:
- cash loan
- loan issued using a passport without providing other documents
- express loans
- loans without collateral, guarantors, down payment
On the one hand, insurance protects not only the bank, but also the borrower. The problem is that you have to pay for everything. Insurance premiums can increase the cost of the loan by 1-10%. Considering that people apply for a loan not because they have a good life, I would like to understand in which cases obtaining insurance is a mandatory condition, and in which cases the service can be refused.
Is it possible to take out a loan without insurance?
According to the Mortgage Law, the mortgagor is obliged to insure the property in full against the risks of damage and loss. The bank may also oblige the car loan borrower to purchase a CASCO policy. Thus, compulsory insurance Only loans for large amounts are subject to, for which the acquired property is the bank’s collateral for the loan:
- mortgage
- car insurance
The bank must be confident that the loan will be repaid on time and on time. It is impossible to refuse insurance when concluding a mortgage agreement. But the borrower can voluntarily choose an insurance company. In practice, it is not uncommon for Insurance companies, with whom the bank cooperates, do not offer the most favorable conditions.
All other types of insurance, namely:
- health insurance against temporary disability
- life insurance
- title insurance against repossession
- loss of job (layoff due to employer's fault)
are concluded on a voluntary basis.
Algorithm of actions
If you do not want to buy insurance when concluding a consumer lending agreement, adhere to the following algorithm:
- Please notify us of your refusal of insurance before you apply. loan agreement.
- If the bank manager continues to insist on purchasing a policy, contact the head of the bank department.
- If the manager is absent, call hotline jar.
Forcing additional services on customers is contrary to the law on consumer lending. Nobody needs problems with the law, so the borrower should agree to a meeting.
How to cancel insurance?
You can also refuse insurance after concluding a loan agreement and purchasing a policy. To do this, you need to contact the bank and insurance company with an application, explain the reasons for the refusal with references to the relevant clauses of the law. If you receive a negative answer, you can continue to consider this issue in court.
If the answer is positive, the bank must provide a new repayment schedule excluding insurance payments.
Which bank can I get a loan from without insurance?
Many banks offer clients to take out insurance. If you are not ready to prove your rights, look for a bank that initially offers to take out a loan without insurance. For example, there are such programs in a bank Tinkoff Bank, Raiffeisenbank, VTB Bank of Moscow, Alfa-Bank, SKB Bank and other Russian banks.
Information about lending conditions is presented on the official websites of banks. Before you go for a loan, find out:
- loan interest rate
- Possibility of obtaining a loan without insurance
- additional conditions for refusing to purchase a policy
The nuances of lending without insurance
The bank has no right to force the borrower to purchase additional services. If you refuse insurance, you are required to issue a loan. However, in this case the bank may reconsider the terms of the loan. Refusal of insurance may entail:
- reduction of loan term
- reduction in loan amount
- interest rate increase
- review of other terms of the loan agreement
Credit insurance is an additional product sold by banks. In other words - additional profit. This is why, when applying for a regular consumer loan, they take so long to convince you of the need to purchase insurance protection, or even include a policy without warning. At the same time, no one says whether credit insurance is mandatory or not: managers appeal with benefits, the main of which they call a high degree of approval. The full cost of the policy is most often not announced, so as not to frighten, and the amount of insurance per day is stated.
Have you ever thought about how to take out a loan without insurance, if experts say that it is mandatory? We invite you to consider this topic in more detail.
Insurance when applying for a loan - is it legal to impose?
If the question is whether it is possible to refuse mortgage insurance, it is non-discussable, since the contract directly states the need to ensure the safety of the property and life of the borrower, then with consumer lending the situation is different. You have the right not to agree to any additional services (Clause of the contract), and the quality of the main product should not depend on the purchase of additional services (Clause of the Contract).
What does loan insurance provide?
There are different types of insurance, the most common are:
- Life insurance for loans
- Financial protection (job loss insurance)
- Product insurance (for commodity consumer loans)
Life insurance is the most favorite service of banks because it is...the most useless. This is because insured events on loans are death and disability, and then only groups 1 and 2. That is, even if you break your arms, legs and neck in addition, the case will not be considered insured. At the same time, the cost of the policy is rather high. For example, do you know what the loan insurance percentage is at Sberbank? From 1.99% per year and above. And given that insurance is usually included in the cost of the loan, you also pay interest for it.
Financial protection is a more interesting service. Its main purpose is. Naturally, with a lot of restrictions. Only officially laid-off citizens who register with the Center for Labor and Employment in a timely manner are protected. That is, if you were fired by your own or by agreement of the parties, you are not entitled to claim insurance compensation. But some banks are adding variety to this essentially useless service: for example, Home Credit has added the ability to skip payments, restructuring, credit holidays and refusal to collect from relatives. The cost of the service is on average 0.7% per month.
Product insurance is no longer a popular service; it is available only in large network trading organizations. In some cases, it extends the warranty period for the purchase, in some it includes protection against adverse circumstances - theft, intentional damage, etc. Why this type of insurance has lost its relevance is easy to explain - firstly, there are only a few warranty service centers, and a client with a broken blender from Omsk will definitely not go to Moscow for repairs under warranty. Secondly, federal networks themselves sell a similar service, calling it differently: extended warranty, additional service policy, VIP client, etc. In fact, this policy only gives the right to what is already provided by law with slightly less resistance from the organization. The cost of the policy usually ranges from 300 to 3000 rubles.
There are many more different insurance programs that can be offered to you when applying for a loan. Most of them are just as useless, with the possible exception of insurance. bank cards. It protects against fraudulent activities. Theoretically, and by law, banks should be responsible for the safety of funds, but in every case they find a motive for refusing to return the stolen money. For example, loan insurance at Sberbank - the terms of the policy include such actions as phishing, receiving money from third parties, skimming, robbery, robbery, etc. All these are more real risks from which it makes sense to protect yourself.
Now that you understand what a la “benefits” it brings insurance protection, every client who falls for the bank’s bait will come up with the thought: how not to pay loan insurance? Now we'll teach you.
How to cancel loan insurance?
Let's assume a situation: you have already drawn up a contract and found that insurance is included. How to refuse?
Refusal of insurance after receiving a loan from Sberbank, Alfa Bank, Home Loan and any other is simple: you need to come to the bank’s office and write an application for refusal of the service. In some cases (when the insurance company is not owned by the bank), the application must be submitted directly to its representative office. The insurance premium will be refunded for unused time. The funds will be transferred after about a month to the account specified in the application (usually the same credit account or savings book).
If you refuse, it would be a good idea to indicate in your application that the service was not activated voluntarily - that you were not asked about it. This condition is contrary to the law, and the bank will be afraid of publicity. In judicial practice, there were many similar cases where clients won cases based on imposed services. By the way, if you did not sign the insurance contract (many sign it automatically), then do not be lazy to spend time on it - this is a 100% winning deal with a pleasant amount of compensation for moral damages.
Almost always, when applying for a loan, you are offered to immediately draw up an insurance contract. Thus, banks want to protect themselves from possible risks of loan non-repayment. Many of them may even refuse a loan if you don’t take it. Since the insurance service is paid for by the borrower, this procedure is undoubtedly beneficial for the bank. But is insurance beneficial for the borrower? analyzed all the pros and cons of consumer credit insurance.
What is insurance?
Credit insurance is an agreement concluded between the borrower and the lending bank and covers all types of risks associated with credit relations. Credit insurance provides for reimbursement to the bank of money issued to the borrower in the event of insured event and default on debt repayments.
The purpose of such insurance is reduction or complete elimination of risks non-repayment of the loan in case of insolvency of the debtor.
A loan insurance agreement is almost always comprehensive. This means that it usually includes almost all types of insurance. It is worth keeping in mind that the borrower always pays for the insurance service and the amount of insurance may increase the loan amount to 10%. Since a tenth of a loan is a fairly large amount, usually insurance premium included in the monthly loan payment. Insurance covers up to 90% of the debt to the creditor.
In the case of a consumer loan, you can enter into an insurance contract once or renew it annually. But here you need to keep in mind that in case of refusal of insurance, the bank may increase interest rate for using the loan. Thus, the lender tries to minimize possible losses.
Types of credit insurance
There are four main types of insurance for a bank borrower:
- Borrower's life insurance. This type of insurance is an extensive program and involves a number of risks, including the death of the borrower.
- Disability insurance. An insured event occurs when the borrower, due to health reasons, can no longer work and therefore repay the loan.
- Insurance against involuntary job loss. The key word here is “involuntary.” An insured event is a layoff, termination of an employment contract, or liquidation of a company. If you were forced to write your own resignation letter, you may not even count on the insurance company paying your loan.
Of course, any type of insurance is primarily beneficial to the creditor bank. The bank minimizes everything possible and does not pay the insurance company. For the borrower, insurance means additional expenses, so it is very important to evaluate all the advantages and disadvantages.
The main advantage of taking out credit insurance is your peace of mind. Insurance gives you the opportunity not to worry about fulfilling your financial obligations in case of unforeseen circumstances and, of course, we don’t want to think that anything could happen to us. Losing your job or being unable to work can put you in a really difficult situation.
Unfortunately, there are also disadvantages to taking out insurance policies.
Firstly, this additional expenses. Considering that a consumer loan is usually taken out because there is not enough money, this is a rather unpleasant fact. In addition, the probability of an insured event occurring is quite low.
Secondly, even when an insured event occurs, insurance companies do not always return the borrower’s debt to the bank. There are many limiting factors that the insurer may refuse in compensation for damage.
Whether or not to take out insurance depends on whether you value money or your peace of mind. If you decide to take out insurance, then read the contract carefully, and also in advance discuss all the details insured event and clearly define what documents you will need to provide.
Loans help correct a temporary difficult financial situation. Arriving at the bank, it turns out that everything is not so simple. Almost everyone offers credit insurance financial organizations. The practice is relevant not only for Russia, but also for other countries.
What is credit insurance?
This is one of the ways to protect against credit risks. That is, the bank will receive its funds back, as well as interest on them, even if the borrower refuses to do so. In such a situation, all obligations are transferred to the insurance company. Such an event is beneficial not only to the bank, but also to the person who decided to get a loan. The fact is that this method allows you to protect the property of the policyholder, which can be used to compensate the insurance company for damages.
Credit is not valid in all cases, but they are specified in the agreement. It is usually relevant when:
- loss of health,
- risk of life,
- loss of property rights,
- dismissal,
- fires, floods and other disasters.
The services of insurance companies are not provided free of charge. Consumer credit insurance is mandatory for the entire period until the money is paid. In this case, the full cost can be covered immediately or as the loan is paid off. On the one hand, this is convenient because it does not require additional large investments from the borrower. On the other hand, it requires calculation own funds and consideration of additional financial burden.
Today, insurance is divided into compulsory or voluntary. The latter may be recommended, but if refused, the decision cannot be changed. In reality, it turns out that refusal of voluntary insurance leads to a negative decision when determining whether money can be paid to a person.
Some financial institutions do not even ask a person if they want to insure their loan. If you read the contract carefully, you may have noticed that this clause is already included in it. in fact, insurance clauses are required only if property is provided as collateral. In all other cases, loan insurance is not mandatory.
According to Article 935 of the Civil Code of the Russian Federation this type services is a voluntary activity. It cannot be forced. If the bank imposes additional services when financing, you can refuse them without fear of losing anything.
- The subtleties of credit insurance are as follows:
- The amount of insurance significantly increases the money paid.
- Even the monthly amount paid includes the insurance premium.
- Under some conditions, such an agreement will have to be renewed every year.
The last point sometimes causes a lot of controversy, because if the borrower decides not to renew the insurance in subsequent years, the bank begins to demand its money back.
Waiver of credit insurance
We realized that refusal to insure a loan can lead to a negative situation on the part of financial institution. However, from June 1, 2016, the decision became relevant Central Bank, allowing you to refuse any imposed insurance. Such an agreement can be canceled within five days. In this case, the insurer is forced to return the money within 10 days after receiving a written application from the client. If the contract came into force, but you managed to write an application within 5 working days, then the insurance company may keep a certain amount of money.
Reimbursement of insurance for credit insurance can occur in two situations:
- when a person fulfills his obligations to the bank ahead of schedule,
- upon termination of the insurance contract.
You will return full insurance only if the loan is repaid within the first month of the period specified in the official papers.
All that is required to get your money back is to write a statement. If no response is received within five working days, then you have the right to complain to the Central Bank. There are situations when insurance cannot be returned:
- with pension insurance,
- if you take out insurance when traveling abroad,
- the agreement concerns farming,
- a contract is needed to obtain permission to engage in professional activities.
