Right to Withdraw from Credit Life Insurance

Credit life insurance is often offered by banks during the loan purchase – in order to secure the loan in case of death. Here, the role of banks acts as an intermediary for the contracted insurance company.

In fact, banks bring together insurance companies that sell life insurance and customers who receive loans

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In fact, this may seem useful to everyone in practice:

  • The Bank guarantees its debt despite death.
  • The insurance company reaches customers through banks and sells life insurance products.
  • The customer, on the other hand, signs the insurance policy immediately without any additional effort as he does not want to leave a debt burden on his family.

While everyone in the above classic loan purchase process is happy, you may want to take an X-ray financially. At this point, you can do research about life insurance and encounter a different life insurance offer…

 

“Best Price and Best Scope” When the difference is found in an insurance company

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Although the belief that life insurance is often only available from the bank is dominated by the loan process, in fact, this is not the case. If you are one of those customers who are striving to reduce the cost package while borrowing, you have the most natural right to search for different insurance companies in life insurance.

You may use the “right of withdrawal in your existing loan life insurance contract if you have encountered a different insurance offer that meets the same criteria and you think it is more appropriate to your budget. The Insurance Legislation has clearly decided that individuals can exercise their right of withdrawal. This right may be exercised within the first month of the insurance date according to the legislation. (However, each insurance company may have a different time limit on the right of withdrawal. If you will use this right, have a look at the section on the right of withdrawal of your policy.)

 

How Does the Process Work?

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  • You will need to write a petition to the financial institution to which you have withdrawn the current life insurance and submit it to the bank assigned.
  • It is easier for you to forward the offer and scope of the alternative insurance company to the institution you are using the loan. In this way, your bank can be sure that the debt is secured.
  • If your bank representative is not sure about this; remind him of the “Goodwill” clause of the Undersecretariat of Treasury’s Insurance Regulation on Retail Loans:

ARTICLE 13 – (1) The right of the borrower to choose the insurance company cannot be limited. All conditions stipulated in the insurance contract or credit agreement for the construction of the insurance to a certain insurance company are null and void. The credit institution is obliged to accept the insurance policy that the credit beneficiary has made through another insurance company or insurance intermediary, which meets the required collateral and period requirements and which is the credit institution.

  • If your bank does not accept your petition or does not perform your cancellation despite your petition, you can apply to the Undersecretariat of Treasury, General Directorate of Insurance and Banking Regulation and Supervision Agency to investigate your rights.

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