A credit insurance policy is a policy that covers the credit risk faced by companies. If companies have debtors and the debtors cannot clear their dues because of death, disability, or bankruptcy, the credit insurance plan pays the outstanding dues and enables companies to generate revenue.
These policies, therefore, shield companies from bad debts with a negative effect on their profitability. Credit insurance policies could be taken by companies and well as by individuals availing a loan.
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Types of credit insurance policies
Credit life insurance: Under this coverage, credit risk on account of the passing of the debtor is insured. If the debtor dies before paying off his debts, then the coverage would cover the debt.
Charge disability insurance: In the event the debtor gets disabled because of that repayment of these debts is impossible, the coverage would pay for the repayment.
Credit involuntary employment insurance: In the event, the debtor gets jobless and loses his source of earnings he may not have the ability to pay back his accountability. The coverage would cover these contingencies and cover off the debt to the borrower's behalf.
Trade credit insurance: This policy is especially intended for companies and shields companies from bad debts because of non-repayment by debtors.
A credit insurance coverage is useful and takes good care of repayment associated dangers thereby indemnifying your company in the event of losses.