11/9/2020 11:56 am
Large purchases are often financed with a loan. Financial institutions often offer insurance to help when things get tight. This is usually bad business for customers.
Those who take out loans are often also offered residual debt insurance. This policy is intended to protect the default of the loan against certain risks – for example in the event of death, incapacity for work or unemployment.
However, a test by the Stiftung Warentest of the residual debt insurance from 25 banks shows that protection is usually expensive. The insurance premium can drive up the interest rate on the loan, reports the magazine “Finanztest” (12/2020).
An example: A financial institution in the test charges 2.89 percent interest for a loan of 10,000 euros without insurance. If all three risks are hedged, however, the interest rate rises to 12.30 percent. The insurance costs a total of 2280 euros.
Another problem: the policies often do not work because the insurance conditions contain restrictions. In the case of unemployment, for example, the insurers often only pay if it is not their own fault. The advice of the experts: if you have other collateral, for example savings, you can do without the policy.
Copyright 2020, dpa (www.dpa.de). All rights reserved
—
