How to refuse insurance on a loan: instructions, nuances, recommendations and feedback

Recently, the future borrowers are increasingly faced with the need to purchase an insurance policy, and sometimes several at once. The Bank seeks thus to insure itself against unreturned borrowed funds and increase its incomes. Borrowers, in turn, do not want to overpay for the imposed service and do not want to be deceived. Therefore, before you apply for a loan, you need to understand whether you can refuse insurance on the loan. The nuances in considering different options may vary. Let's consider when it is not necessary to make out an insurance policy, and when it is better to insure yourself and your finances.

What is credit insurance?

The insurance policy is a guarantee of the return of funds taken from the bank when the borrower has an insurance event.

The first reason why a bank benefits from cooperation with insurance companies is the sale of insurance policies and obtaining agency payments from insurance companies when selling their products to borrowers.

The second reason is that the insurance company places insurance reserves in the bank's deposits. Funding of financial institutions is made in exchange for attracting them to the insurance organization a certain number of insured persons. The exchange is made in the ratio of 7: 1, where for every 7 rubles from the sold insurance the bank receives 1 ruble from the insurance company in the form of deposits.

Why should I insure myself?

It is not a secret for anybody that banks are not entitled to carry out compulsory insurance of clients. But this is in theory. In practice, in order not to get trapped, it is necessary to read the loan agreement very carefully , so that you do not have to ask how to refuse insurance on the loan and not write the statements of claim. The court in each particular case ascertains whether the borrower's receipt of a loan depends on the acquisition of an insurance policy, and whether the main factor affecting the bank's positive decision is the absence or, on the contrary, the existence of an insurance contract. After all, according to one of the articles of the law "On the Protection of Consumer Rights" it is prohibited to make the acquisition of certain services dependent on the mandatory acquisition of others.

But of course, the need for compulsory insurance as a condition for obtaining a loan is absent in the loan agreement. This phrase is camouflaged as "collateral for the fulfillment of obligations on the part of the borrower to the bank". So the bank, it turns out, is clean before the law.

Is it possible to refuse insurance?

In fact, when making a loan, credit managers impose insurance on them. But how to refuse insurance on a loan? The instruction consists of only two steps.

Step 1. Refusal of insurance is performed immediately after the conclusion of the loan agreement. But it is necessary to make sure that the termination of the insurance contract will not entail an increase in the annual credit interest or other "punitive" measures on the part of the bank.

Step 2. After that an application is written to the insurance organization, and after a certain time the insurance premium will be returned in full or in part (this can be stipulated in the insurance contract upon its dissolution).

Some credit managers tell their clients how to correctly reject Insurance for the loan. To do this, it is enough to make monthly payments in full and on time within 6 months from the date of signing the loan agreement. After the expiration of the six-month period, you should apply with a written application for termination of the insurance contract to the bank's credit department. Why wait 6 months? The insurance contract is concluded for a minimum of six months. Do not be surprised to the borrower when, after the termination of the insurance contract, a higher percentage will be charged for the balance of the principal debt, and monthly payments will increase. Thus, the bank compensates for itself the lost funds.

Another option, how to refuse insurance on a loan, Is to file an application with a court. To the statement of claim, it is necessary to attach credit documents, and, if possible, a written refusal of the bank.

Arbitrage practice

Based on judicial statistics, in 80% of cases the court takes the side of the borrower, forcing the lender to terminate the contract, pay insurance and make the recalculation of the principal.

Credit insurance: how can I refuse insurance of consumer credit?

Typically, consumer lending is characterized by a short period, lack of collateral and a high interest rate. It already by default includes all the risks that the bank may incur.

But some financial institutions are persistent, trying to insure the life and health of their borrowers. Insurance against loss of work is widely used. And if the first type of insurance justifies itself a little, then from the second the borrower bears direct losses. And all because, as an insured event, loss of work is considered not at his own will, but in connection with the liquidation of an enterprise or the reduction of an employee. But, as practice in Russia shows, when one of these moments occurs, the employer will let his employee write the application at his own request, so as not to pay him the compensation due. Also, when making a loan, the bank in the amount of the principal debt includes, by default, the insurance premium, and the annual interest is calculated from this amount.

It is worthwhile to note that the very concept of an insurance event is very complicated in the contract. Very often, when an insured event occurs, it is almost impossible for an insured person to receive compensation. And an example of that is the clause of the insurance contract, which states that "with the slightest change in one's health, the insured person is obliged to report this to the insurer". But in practice, most simply swing the contract, without going into details and, accordingly, not observing this condition. What does the insurer use to not pay. In this case, considering the question of how to refuse insurance on the loan, the answer will be a close examination of the loan agreement.

Auto Loan

Making out a car loan, the borrower is required to purchase two insurance policies: life + health and CASCO. But at the same time in one of the paragraphs of the insurance contract it is said that it is not necessary to insure the subject of the pledge. Example: VTB Bank offers its borrowers a car loan without issuing a CASCO policy. But at the same time, the annual interest for which a loan is issued is increased by 5-7.5 points. Therefore in this case it will be more correct to issue this policy.

Do I need to insure my life?

But each borrower is better to decide: to refuse insurance on the loan VTB and get an increased annual percentage or look for a bank with the best offers. But over life and health insurance it is worth considering: the term of the car loan is from 2 to 5 years, and if the borrower receives a loan for a car in his youth and does not like fast driving, then the probability of an insurance event is small.

Insurance in a bank for a loan - how to refuse a mortgage?

Here you can not get out of insurance. The law obliges to conclude an insurance contract "On loss and damage to the subject of pledge" (Article 31 of the Law "On Mortgage"). Two more insurance programs, which the borrower can use at will - termination and restriction of property rights (title insurance), as well as loss of life and work capacity. But if he refuses, then the bank has the right to review the interest rate in a larger direction. In general, banks are extremely rare, in which the increase in the interest rate does not depend on the formulation of the insurance policy.

And if the annual rate increases by 1.5 points in case of refusal of title insurance, the refusal to design two policies (title and life insurance) will lead to an increase in interest by 10 points at once.

Calculation of interest on insurance is as follows

• The pledged property is estimated at 0.5% of the insured amount.
• Title insurance ranges from 0.1 to 0.4%.

But life insurance draws already at 1.5% of the amount of insurance. But, taking into account the conditions under which a mortgage is issued in Russia, the need for registration of title insurance and life + health for those who want to take a mortgage is inevitable.

There are mortgage programs that assume insurance only for the subject of pledge. These programs are used by Sberbank credit. Can I cancel insurance for other insurance programs? Yes, but with the refusal of title insurance, the annual percentage will rise by 1 point.

The benefit for the bank, as mentioned above, is the agency fee that the financial institution receives from the insurance company when processing policies. Therefore, the credit organization is extremely unprofitable to inform the borrower about the information, How to refuse insurance of a bank on a loan.

Also very often there are cases when the bank and the insurance company are affiliated structure. It is for this reason that the bank insists on purchasing insurance policies from certain insurance companies by the borrower.

We hope that now each of the readers knows how to refuse insurance on the loan. The main thing - carefully read the contract!