Credit Insurance fintech is a type of insurance policy that pays off one or more existing debts in the event of company default.
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Credit Insurance Benefits
The benefits of credit insurance are important for Small and Medium Enterprises (SMEs) or Large Enterprises, especially credit insurance benefits for fintech below.
- Removes the credit risk from your balance sheet, which improves your margin and bolsters your P&L.
- Reduces bad debt provision.
- Provides access to key credit risk analysis from insurers on your client, their sector, and political risk, giving invaluable insight to help avoid losses.
- Increases your credit rating, giving access to improved and more economical levels of finance.
- Acts as a cost-effective replacement for expensive bank guarantees and letters of credit.
- Disciplines within a credit insurance policy support best practice and sound credit management processes, reinforcing and enhancing your existing procedures.
- Provides support for setting credit limits on your customers and, in the event of a claim, the management of recoveries and salvage.
- Allows you to safely extend payment terms to customers in existing and new or developing markets.
- Offers top or key account cover to support sales to specific or high-level margin markets.
- Helps secure your cash flow by protecting you against non-payment.
- Minimizes the risk of bad debt by insuring your accounts receivable.
- Improves customer relationships.
- Makes companies more comfortable extending credit because the risk of default is significantly mitigated.
- Acts as a safety net for credit card owners in tough economic times.
Generally, credit insurance is more directed at financing activities to support the completion of construction service projects owned by both the Central and Regional Governments. Please note that credit insurance is voluntary, and lenders cannot deny you a loan or a line of credit if you don’t buy credit insurance from them. However, lenders may offer you the option to buy credit insurance when applying for an auto loan, an unsecured personal loan, or a credit card.
Credit Insurance Considerations
Before purchasing credit insurance, it is important to consider the following questions.
- Do you have other insurance or assets that would cover debt obligations in the event of your death, disability, or unemployment?
- Would it be better to buy a life insurance policy or a disability insurance policy?
- If you purchase single premium coverage, will the premium be financed as part of the loan? If so, how much will the loan payment increase due to the cost of the credit insurance?
- Will the credit insurance cover the full term of the loan and the entire balance?
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Is Credit Insurance Can Be Availed
Yes, insurance credit can be availed. Credit insurance is an optional insurance sold with a credit transaction, such as a mortgage or car loan, promising to pay all or a portion of the outstanding credit balance if the insured is unable to make their payments due to a covered event, such as loss of employment, illness, disability, or death.
How long does the credit insurance claim process take
The credit insurance claim process can vary depending on the policy and the insurer. Credit insurance policies often contain complex time limits, including for the date an insurance claim can be brought, usually many months after the date of loss.
The trade credit insurance process can be broken down into six steps, including customer analysis, determining credit limit, monitoring credit limit, making a claim, assessing the claim, and paying the claim. Once a claim is submitted, it will be reviewed, and the insurer will send an acknowledgement and claim reference number within two working days. Within five working days, the claimant will receive a dedicated team member name and contact details, as well as details of the initial assessment.
The insurance company has 15 business days after getting what it needs from the claimant to decide if it will pay the claim. It is important to note that insurance claims and payouts always take time, and there may be discussions with the insurance company where they may ask for more information. If the claim is approved, there may still be a delay before payment is issued.
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