Cost

Calculating the cost of Loan Insurance

When you take out Loan Insurance, you agree to an increased interest rate on your loan. The interest rate on your loan corresponds to the sum of two rates: the basic interest rate charged by your financial institution and an additional interest rate for the insurance.

This approach enables your premium instalment to be calculated based on the balance that is due. Generally, the premium decreases as the loan balance decreases since it reflects the payments made on the principal. You therefore pay a fair premium for the real risk that your loan represents.

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