| Question | Answer |
| Why should I offer credit life insurance to borrowers? | Credit life insurance provides significant benefits for both lenders and borrowers: For lenders:It mitigates the risk of loan defaults by ensuring repayment in case of unforeseen events like the borrower’s death, disability, or job loss.It safeguards the lender’s portfolio by transferring default risks to an insurance provider. For borrowers:It offers financial protection for the borrower’s family or business, preventing the burden of unpaid debts during challenging circumstances. |
| What types of risks are covered under credit life insurance? | Credit life insurance typically covers the following risks: Death: If the borrower passes away during the loan tenure, the insurance covers the outstanding loan amount. Permanent / Temporary disability: If the borrower becomes permanently disabled and is unable to work, the insurance pays off the remaining loan balance. Job loss: If the borrower is in involuntary unemployment, ensuring repayments are made |
| Can I customize which loan products include credit life insurance? | Yes, you can customize this. Credit life insurance is configured at the product level, allowing you to choose which of your loan products to insure. This flexibility ensures that you can tailor the insurance offering to suit specific products or borrower segments, aligning with your business strategy. |
| What information is required to set up insurance | All that’s required is for you to be a lender on the Lendsqr platform. There are no additional configurations needed, as Lendsqr has already handled the necessary integrations to ensure a seamless setup process. This allows you to start offering credit life insurance without any extra technical setup or customizations. |
| Who pays the insurance premium—the borrower or the lender? | The borrower pays the premium. Once the loan is approved and disbursed to the borrower’s wallet, the premium amount is immediately deducted from the disbursed funds. At this point, a credit life insurance policy is automatically created for the loan, ensuring seamless coverage without requiring additional steps from the borrower or lender. |
| Does the insurance premium affect the borrower’s repayment terms? | No, the insurance premium does not change the borrower’s repayment terms. If a borrower takes a loan of ₦1,000 with a premium of ₦50, they receive ₦950 as the take-home amount. However, the repayment will still be based on the full loan amount of ₦1,000, along with any applicable interest. This ensures that the borrower is covered by the insurance policy while maintaining the original repayment structure of the loan. |
| What happens if a borrower defaults due to circumstances not covered by insurance? | If a borrower defaults due to reasons not covered by the credit life insurance policy, the lender assumes the responsibility for managing the default as they normally would. This could involve: Initiating standard debt recovery processes, such as reminders, auto recovery using cards and mandatesApplying penalties or fees as outlined in the loan agreement. The above are already automated by Lendsqr The insurance only covers specific events such as death, permanent disability, or job loss (if applicable). Defaults outside these conditions are treated as standard loan defaults, and the lender bears the associated risks. |
| How do claims get processed in the event of borrower default? | For claims to be processed, these claims documents need to be provided and claims would only be paid or done within 48 hours of receiving a signed discharge voucher. A discharge voucher is a form that states the amount that will be payable to the customer and he/she has to acknowledge the amount by signing the form. Death of the life assured: The outstanding loan benefit to be paid in accordance with the terms of the policy document.Permanent disability of the life assured: The outstanding loan benefit to be paid in accordance with the terms of the policy document. Critical illness of the life assured: The outstanding loan benefit to be paid in accordance with the terms of the policy document. Loss of Job of the life assured: Maximum of six months loan repayment to be paid subject to the waiting period in accordance with the terms of the policy document |
| How long does it take for claims to be settled? | Claims would only be paid or done within 48 hours of receiving a signed discharge voucher. |
| What is the rate for the premium? | 0.15% |
| Are borrowers notified once the insurance is created on their loan? | Yes, borrowers are notified once a policy has been created for them. An email with the coverage details is sent to customers |
| How long does a borrower need to be away from involuntary unemployment before the claim can be processed? | 3 months |
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