Losing a job is never pleasant. Apart from purely human factors, it is also often a severe financial consequence for the household. Suddenly, we are cut off from the primary source of income, and fixed monthly costs remain.
There are solutions on the market that can minimize the consequences of losing a job. Are they used for loans and do we mean unemployment insurance ? How it works? Is it worth having them?
In what situations is unemployment insurance most often used?
Unemployment insurance is most often used in medium and long-term loans. Banks often offer them as part of the mortgage loan package, but we will also find a proposal to buy such insurance along with a cash and consolidation loan.
By going to many Insurance Companies we will also meet with an offer to buy this type of product. The unemployment insurance will be an additional insurance and the bank will not require you to have it. Of course, he can try to motivate us to buy it, e.g. by lowering the margin. Is it profitable for us?
Tying and bundling – can the bank require us to purchase additional products ?
How much does unemployment insurance cost?
The final insurance price depends on the type of loan and is most often given as a percentage of its amount. For mortgage loans, average offers oscillate around 1 – 1.5% per annum on the amount of the liability, which for a loan of 250,000 PLN, from 2,500 PLN to 3,750 PLN a year.
If we convert it into months, we will get a value of between 208 and 312 PLN. The installment of the loan for the said amount is about 1200 PLN (depending on the offer).
The amount of the insurance premium can therefore be between 17% and 26% of the loan installment. Therefore, it is a value noticeable in the entire monthly commitment.
General Terms and Conditions Insurance
A simple insurance calculation showed us that this is not a cheap solution. In what situations will it apply? The purpose of insurance is primarily to help the borrower in a random event, which is the loss of a job. By definition, a random event cannot be caused specifically by the insured, therefore in any insurance the exclusion will be a situation in which the insured resigns himself from work.
The basic condition must therefore be that he will be dismissed from work. The insurer will also not want to allow a situation in which the insured will delay finding a new job, because the Company repays his loan, so he has no motivation. Therefore, the general terms and conditions will always include the maximum time during which the Company assumes the repayment of the liability. Depending on the offer, it will be from 3 to 6 months – which objectively should be enough time to find a new job.
Insurance against job loss means that the Company will take over the repayment of the mortgage, but only in the period specified in general conditions. This period is to allow the client to find a job.