What Happens When You Can’t Repay the Loan?

Regardless of whether you need a cash loan, a refinancing loan, or a housing loan, in each of these cases, you can, along with the loan, also take out insurance which will cover the costs if you find yourself unable to repay the loan. In addition to this, there are also insurance houses which offer insurance for other lending products aside from loans, by which we primarily mean credit cards and overdraft limits.

There are two kinds of this type of insurance:

– life insurance policy and

– unemployment insurance.

In the first case, the insurance covers the situation that arises due to the death of the beneficiary of the loan, full and permanent disability, or some of the other risks covered by this policy.

Regarding unemployment insurance, the insurance house pays monthly installments instead of the loan beneficiary. However, one should be aware here of what banks and insurance companies consider the loss of a job.

In their terminology, the loss of a job entails the termination of the employment by the employer and then only if there has been no violation of work obligations by the employee. In addition to that, the insurance will pay money to the bank only if the client had been registered at the National Employment Service and if a period of 60 days, that is, two months, has ended.

This type of insurance cannot be given to those who:

– are temporarily employed;

– work in an enterprise or are entrepreneurs themselves;

– are employees who work in companies which have fewer than five workers;

– are non-residents and employees in companies which are not registered in Serbia;

– are pensioners.

Everybody else, then, can count on the insurance paying eight consecutive monthly installments, or a total of 12 installments during the loan repayment period, in case of the loss of a job. It is important to note that insurance payment does not entail late installments, or default interest.

For housing loans, property insurance is mandatory, and all other insurances are a matter of choice for those who are taking out the loan.

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