Group Credit Presentation for corporates pptx

Av ery good presentation on Group Credit Insurance

1. Principles of Credit Life Cover In United States, the motto for Credit Protection Insurance in Cooperatives is ‘A MAN’S DEBT SHOULDN’T LIVE AFTER HIS DEATH’ Credit Life Cover is primarily provided as a death cover It covers risk to mortgage / other types of loans against untimely death of the borrower

2. Types of Credit Cover Based on Premium Single Premium : Bank adds single premium to loan amount and recovers in installments. This is administratively simple and gives additional profit to banks. Less flexible as loan schedule has to be fixed upfront. Regular Premium : Generally offered in group plans. Premium is paid by the bank as a part of Risk Management to ensure recovery of loan in case of death.

3. Features of Credit Cover Cover is usually decreasing based on initial amortization schedule and claim is settled irrespective of the actual outstanding for ease of administration. Incase of ‘Level Cover’ outstanding loan is paid from the death benefit and remaining money goes to the dependents of life insured For Top-Ups or Rescheduled Loans, either prorated premium on existing cover is charged (easier to explain and understand) OR fresh underwriting is done to determine new premium

4. Benefit – Premium Combinations Level Sum Assured and Level Premium – This is a good option, if bank is not a beneficiary. For customer some additional benefit would be available after settling the loan. Increasing Sum Assured and Increasing Premium - Applied rarely. Only in cases where there is expected increase in mortgage / risk and insurance need Level Sum Assured and Single Premium - Simplest form of credit cover Decreasing Sum Assured and Single Premium – Generally the cheapest and comes with no ‘excess’ benefits Decreasing Sum Assured and Limited Premium Payment Term – A customised product designed as per the specific need of the banks’ customer base.

5. Benefits of Group Credit Cover Security of loan repayment against death of borrower Protection of Assets, in liquid form Avoiding losses on waive-off Very very affordable Can be applied across all age groups and geography Can provide umbrella for Micro-Credit as well as Agricultural related loans Facilitates smoother claim settlement Part of broader service to the nation and the society in general

6. Benefits of Group Credit Cover Can come with Disability cover, Critical Illness Cover, Accidental Death Cover, Permanent Disability Benefits Prevents cascading effect on capital flows, future interest rates, stress on administration, legal aspects, human aspects and impact on banks’ performance (audit ratios)