What is a payment protection insurance and what do you do in Crowdlending?

Person who wrote the post admin Jan 31, 2019
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We are repeatedly asked about hedging for the borrower and security for the investor. Since rate insurance is an important element in the crowdlending business, we like to include this topic in our blog.

What are payment protection insurance?

The payment protectioninsurance covers the most important risks of the private borrower and thus offers the customer as well as the family financial security in the event of a claim. The payment protection insurance at Crowd4Cash covers unemployment, incapacity, death during the entire term, divorce six monthly installments. In doing so, the insurance company pays installments instead of the borrower, thus reducing its financial obligations. The borrower is the policyholder, but the insurance pays directly to Crowd4Cash, which then forwards the payments to the lender as usual. Thus, the risk for the lender drops significantly, since the most important cases of a payment default are largely covered.

What do the payment protection insurance in Crowdlending bring?

In crowdlending, installment insurance is particularly valuable as it provides more security for both parties involved. The borrower protects himself and his relatives in the event of a claim from the financial consequences of the loan installments. The rates can become a heavy financial burden in the case of unemployment and disability, which drastically reduces income. The payment protection insurance takes over the installments and brings noticeable relief. For the lender, this results in increased security, since the installments in the event of a claim are taken over and paid by a financially strong insurance company. Investors see directly in the investment overview investment overview at the credit project whether an insurance protection exists or not.

What does Crowd4Cash offer and what is special about it?

Crowd4Cash offers the most comprehensive payment protection insurance in Switzerland. For example, with a waiting period of three months, 12 monthly installments are usually covered in the event of unemployment or disability. This may in many cases bring a strong, short-term relief. However, this coverage may be insufficient especially for longer terms. This is very annoying for all parties: Thus, the borrower can no longer pay his installments and gets into debt through no fault of his own. The lender suffers at most losses on his investment.

By contrast, Crowd4Cash's insurance covers the risks of unemployment and incapacity for work after the waiting period of three months during the entire contract period. In addition, in the case of divorce, also a frequent reason for financial problems, six monthly installments are assumed. This gives both parties more security. In this case, borrowers and lenders can fully benefit from the insurance cover even for longer terms. More information can be found here. Of course we are as always personally available for questions.