According to the logic of banks, life insurance is designed to protect borrowers and shift the care of loans on the shoulders of insurance companies. In practice, the design of the policy turns around the imposed service, more than charging money. Payments even in the presence of an explicit insured event are quite difficult to obtain, and the amount of monthly installments sometimes amounts to 5% of the payment. In these circumstances, the return of insurance on the loan becomes an urgent task.
When can I refuse insurance?
Make a return insurance, alas, can not in all cases. This possibility depends on two factors:
- insurance object;
- terms of a particular contract.
If the borrower or any property is insured (as a rule, it is a pledge), then it is almost impossible to get the insurance return on the loan. It is desirable that the loan itself be the object of insurance. Then, with its early repayment, the borrower will have the right to claim the money back from the insurance company, since the essential conditions of the contract have changed.
Otherwise, you will have to pay attention to the text of the agreement. If the policy states that in case of early repayment of the debt the insurance is returned, then it is possible. Otherwise, no.
At present, the law allows borrowers to voluntarily determine whether they should take out life insurance or not. The requirement of banks to purchase a policy is not justified. You should not succumb to the manager’s persuasion and rely on a lower interest rate – if the applicant does not need life insurance, no one can force him to issue it. Moreover, the terms of the contract are such that only the risks of the bank are insured. The borrower of insurance payments will not receive a penny, but will spend their own money to purchase the policy.
The only option when insurance cannot be avoided is a pledge. With a car loan, mortgage or consumer loan, the individual receiving the money is obliged to insure the property that pledges as collateral. With life insurance there is always a choice. It is also possible to insure not all risks, but only some of them.
Sometimes the bank, wishing to receive additional money from the borrower, invents various pretexts to force it to insure life. For example, ostensibly in case of refusal to purchase a policy, an application is considered not five days, but five days, or that the likelihood of loan approval decreases. In fact, these are psychological tricks to get the client to part with a part of the loan.
When something like this happens, it is important to know that the law is on the borrower’s side. We must firmly say: “I can refuse life insurance” and not succumb to the tricks of the manager.
Terms of termination of the contract
If a life insurance contract was concluded and signed, and even money was transferred from a bank account to an insurance company account, then it is quite possible to return the funds. Each bank has its own rules for early cancellation of the insurance policy, but this can usually be done by submitting a simple application. How long is this possible is left to the discretion of the banking organization. But usually set a limit of 30 calendar days. For ABC Bank, this period is two weeks.
The right to cancel a contract without penalty to the consumer is enshrined in law, therefore the bank does not have the right to charge the applicant any penalties, fines, etc. Moreover, he should not refuse, referring to some internal decisions and regulations.
Therefore, the answer to the question of whether it is possible to return insurance, if you did not have to use it, – yes, and quite legally. However, you need to act quickly – to guarantee the best to come to the bank within a week after the conclusion of the loan agreement.
After this time, the cancellation of the policy is possible only with early repayment of the loan. At the same time, there are such restrictions, depending on the time when the debt was repaid (on the example of ABC Bank):
- if you close the loan within six months, the insurance will return only half of the premium paid;
- if you repay the loan later, the expenses for the entire period, as well as an additional half of the premium, will be deducted from the amount of the premium.
Thus, if it was possible to repay the loan ahead of schedule after the whole year has expired, there is no special point in submitting for cancellation of the policy. The insurance company and the bank will find many legitimate reasons to reduce the amount of the refund amount, and the borrower will receive a penny in his hands. The only way to pick up the money required by law is to go to court, using the help of lawyers and lawyers specializing in economic processes.
How to act if the loan is repaid before the deadline?
Those who think: “How can I return the insurance after the debt to the bank is fully repaid ahead of schedule,” should prepare such documents:
- bank loan agreement and loan repayment schedule;
- a bank statement of the absence of debt or a certificate of early repayment of the loan;
- life insurance contract or insurance policy;
- receipt of payment of the premium in favor of the insurer.
After the documents are collected, it is necessary to issue a statement in which, referring to the provisions of the law and the regulations of the bank itself, it is necessary to substantiate its request. Those who repaid the loan have the right to return insurance for unused periods. For example, if a life insurance contract was extended for 5 years, and the debt was repaid in advance for 1 year, then reimbursement is possible in 4 years.
Another point: not the bank itself, but the insurance company is engaged in returning the money. Therefore, in the bank itself to apply, in general, it is useless, if only to clarify the details of the insurer. But in most cases (including ABC Bank) a representative of an insurance company has a job in the branch itself, and it is he who should deal with such examples. You can contact him directly, but it is recommended to send applications immediately to the regional office.
Thus, it is possible to return insurance on a loan by contacting either directly to the insurance or to its representative, who is located in the bank branch.
The term of consideration of the application is 10 days. After the insurer must provide a response letter, which indicates how much money should be returned, and transfer the entire amount in full to the account of the applicant. Sometimes the bank takes a fee for the transfer, so you need to be prepared to pay a small amount. These expenses can be avoided if you make an account in advance without a transaction fee.
How to act in case of bank failure
As a rule, in large banks, like ABC Bank, it is possible to get a refund without any special problems. Difficulties may arise in smaller banking organizations or regional branches of federal institutions. Relying on the financial illiteracy of the population, the specialists of such banks deliberately mislead their clients and deny them, referring to the mythical rulings and requirements of the regulations. Two points must always be remembered:
- if in the terms of the life insurance contract there is a clause on the partial return of insurance in case of early repayment of the loan, then the bank employees must perform it in any case;
- if the applicant applied for termination of the contract without having paid the insurance premium once, no one has the right to interfere with it either.
All these provisions are enshrined in the law on consumer protection, which has much greater legal force than any provisions of the bank or the insurance company. You can come to the office directly with printed excerpts from the law and refer to them.
If employees of a banking organization or insurance company refuse to accept an application and give any explanations, you should follow this algorithm:
- send an application to the branch office with a copy of the necessary documents and an approximate calculation of the amount of the return by registered letter with notification;
- having received a confirmation in the mail that the letter has been received, wait 2 weeks (more precisely, 10 business days) – this is how much is given to the banks and the insurance companies for the official response;
- if the answer is not followed or it will be negative – a similar complaint is filed with the Rospotrebnadzor and the local prosecutor’s office, a lawsuit is filed with the city (district) court;
- in all these institutions, it is recommended to take evidence of submission of documents and send them to the insurance company, informing you that your intentions are serious and offering to settle the conflict in a pre-trial manner (this will be something like the statement “I can bring the case to court and win”).
Usually, already at this stage, a full return of insurance is realized after the loan is repaid ahead of time – more precisely, of its unspent part.
Thus, the return of insurance on the loan is not possible in all cases. This is legal only if the client cancels the policy before paying the first insurance premium or if the terms of the contract indicate the possibility of repayment in case of early repayment of the loan. To get money back, just write a statement to the insurance or bank. Large institutions like ABC Bank usually return the full amount due by law without problems, but regional institutions or small companies sometimes do not accept applications and delay the return by hook or by crook. In this case, it is recommended to apply to Rospotrebnadzor with a complaint or immediately file a lawsuit with a local court.