What is the Credit Life Insurance Plan?

It is a term assurance plan that provides financial protection for property loan borrowers. Specifically, it helps settle outstanding loan amounts in case you eventually have a risk to life or total and permanent disability of the borrowers. It has 3 types of A, B, C.

Credit Life Insurance

"Credit Life just, Turn Liability into Asset"

Features of the plan

  • Coverage period : 1 to 30 years;
  • Payment mode : single and annually;
  • Issued age : 18 to 60 years;
  • Expired age : 65 years;
  • Sum assured : reduce and flat;
  • Primary beneficiary : Bank/MFI or Creditors;
  • Contingent beneficiary : Specified by the Insured in application form.

Benefits of the plan

  • Pay 100% of sum assured;
  • Cover with total permanent disability (TPD).

Why Credit Life Insurance Plan?

  • Name : Mr. Camroth,30 years old
  • Loan amount : 5,000 USD with interest rate of 8% p.a.
  • Loan period : 5 years, starting from 1st January 2019
  • Primary beneficiary : Bank
  • Contingent beneficiary : Specified in application form.

Illustrated Example:

A Customer of a bank has taken a housing loan as following:

  • Pay the Percentage of Premium Collected of sum assured;
  • Cover with total permanent disability (TPD);
  • Cover diagnose of Cancer, Heart Attack, Kidney Failure, Stroke and End Stage Liver Failure.

Payment:

  • 1. Installment per month (customer pays to the Bank) is $101.38 per month (amortization).
  • 2. Credit life insurance plan A single premium (customer pays to the life insurance company, one time for 5 years) is $49, which is 0.98% to loan amount(49/5,000=0.98%).
  • 3. Credit life insurance plan B single premium (customer pays to the life insurance company, one time for 5 years) is $146, which is 2.92% to loan amount (146/5,000=2.92%).
  • 4. Credit life insurance plan C annual premium (customer pays to the life insurance company, annually) is $19 per year.

Graph illustration

Assumption (after 12th installment)::

With the Credit Life Insurance Plan of Camlife:
– If Mr. Camroth got TPD/dies on 1st January 2020, the Company would pay
1. Credit life insurance plan A: the $4,225 which $4,152.80 paid to the Bank and left-over amount of $72.20 paid to Insured’s family.
2. Credit life insurance plan B & C: the $5,000 which $4,152.80 paid to the Bank and left-over amount of $847.20 paid to Insured’s family.
– If Mr. Camroth wants to pay entire remaining outstanding loan by 1st January 2020 to the bank, he must pay the amount of USD $4,152.80. Then he has 2 options with the life insurance policy.
1. He can keep the policy in-force until the expiry date. If he gets death/tpd, the Company shall pay:
a. Credit life insurance plan A: the RSA amount (based on our table) to his family directly.
b. Credit life insurance plan B & C: the $5,000 to his family directly.
2. He can surrender (terminate) policy:
a. Credit life insurance plan A: by receiving amount of $19 (based on our SV table).
b. Credit life insurance plan B: by receiving amount of $40 (based on our SV table).
c. Credit life insurance plan C: don’t have the surrender value.

This is just an illustrated example, not a contract.