According to Maksim Melamed, Head of the Baltic Partner Division at If Insurance, loan payment insurance has shown a significant upward trend in the past year. “This trend reflects people’s economic insecurity – concerns about managing loan obligations in case of income changes,” Melamed explained. Various banks offer loan payment insurance under different names and conditions, but the core aim remains the same – to assist borrowers in difficult situations.
Melamed attributes this growth to consumers' financial uncertainty, inflation, and rising living costs. “The higher the unemployment rate, the more people want to insure their loan payments. The increase in loan payment insurance correlates with the rise in unemployment, which is about one percentage point higher compared to the previous year,” Melamed stated.
This trend is confirmed by Evelin Rahkema, Head of Loan and Card Sales at Inbank, who noted that more and more consumers are interested in insuring their loans. “To meet consumer expectations, Inbank has started offering payment protection insurance, which protects borrowers in unexpected situations – such as job loss or long-term illness leading to loss of income or working ability,” Rahkema said.
Loan insurance can help cover obligations of several thousand euros, if necessary
“The most common insurance cases involve job loss – whether due to redundancy, company bankruptcy, or health-related reasons. There are also many cases where a person suffers an injury that results in a long sick leave. Less frequently, long-term illness may lead to partial or full loss of working ability. Some death cases also occur, but these are rare,” Melamed explained.
Most major lenders offer loan payment insurance, though conditions may vary. “Depending on the terms, there is usually a 30-day waiting period during which the insurance is not yet active. After that, the insurance starts covering monthly loan payments – typically for 6 to 12 months. For example, if the monthly loan payment is €500 and the insurance covers 12 months, it could cover up to €6,000 in loan repayments. In case of permanent disability or death, the insurance may cover part or all of the remaining loan balance,” Rahkema noted.
However, there are some situations that are not covered by insurance. “If the client becomes unemployed during the waiting period, the insurance will not provide compensation. The same applies if the client falls ill during the waiting period. To avoid such situations, it is essential to read and understand the insurance terms thoroughly,” emphasized the Head of If’s partner department.
Rahkema also stressed the same: “Every loan product comes with consumer responsibility. Therefore, purchasing decisions must be carefully considered, contract terms reviewed, and financial obligations realistically assessed,” she underlined.
