Choose the right credit insurance for your clients
The term “credit insurance” has multiple meanings in the industry.
For several P&C insurance professionals, credit insurance, also called accounts receivable insurance, is a product that provides insurance coverage in case of bad debt. This insurance protects a business from the risk of nonpayment or insolvency of one of its clients.
Banks also offer retail customers a credit insurance product that covers unpaid balances of credit products or that allows insured to make monthly repayments on debt in predefined circumstances such as job loss, critical illness or death.
Life insurers have devised their own form of this product, and sell it in competition with the banks. Humania Assurance became one of the most recent market entrants when it launched its online debt protection insurance IWME DEBT insurance. IWME stands for insurance without medical exam.
Insurance professionals who distribute this product must ensure that they have the appropriate certification, in either P&C insurance or life insurance.
Life insurers’ offering
Seven other life insurers on this market offer a product via the life insurance broker network. Advisors who choose this option should shop around carefully for the best policy for their clients, because every insurer sets particular conditions.
For example, Desjardins Insurance does not sell this insurance in combination with life insurance, but the six other insurers present on this market do. Ontario Blue Cross and Québec Blue Cross does not let clients tack on options linked to loans, unlike the other six rivals. Maximum life insurance amounts, the number of critical illnesses covered and maximum benefits also vary between insurers. This is where the insurance professional’s advisory role becomes crucial: it is their job to firmly grasp the protection that insurers offer in order to select the product best suited to their client’s needs.
Note that the characteristics of Humania’s credit insurance product do not appear in our table because the company did not share them with us.
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