Every time we take out a loan, we hear such a phrase as taking out insurance. Moreover, without it, there is a greater chance of getting a refusal than an approval. Thus, borrowers are forced to pay insurance in order to obtain a loan.
If you need to repay the entire debt amount early, you can return the insurance. Not every borrower knows this. We will talk about how to return insurance for a loan in this article.
The insurance contract is valid for the entire loan period. If the loan is paid ahead of schedule, this agreement is accordingly terminated. But is it possible to return loan insurance? Is everything always done in favor of the client?
What types of insurance premiums are there?
Just a few years ago, insurance premiums were included in monthly payments. They were reflected in the graph as a separate column. When a situation arose that the borrower required early repayment, the installments were not refundable, but subsequent payments were not required.
Today, most insurance is carried out “on credit”, that is, payment is charged once when receiving a loan. For example, a client took 150 thousand rubles. In this case, the contract is drawn up for 170 thousand, 20 of which immediately go to the insurance company. The interest rate will also be calculated on 170, not 150 thousand. When it becomes necessary to return the insurance after repaying the loan, the full amount to be paid will also be announced. Only after the amount has been paid, begin to decide whether the loan insurance can be returned.
Methods for terminating an insurance contract
If the loan agreement is drawn up in such a way that insurance is charged monthly, then it will not be possible to return the insurance after repaying the loan. Therefore, there is no point in demanding a refund.
If insurance is included in the loan itself, then there are several ways to process the return.
- Full return. The entire insurance amount is returned to the client without fees or costs.
- Partial return. Only part of the funds is returned depending on the period of use of the services.
Therefore, there should be no problems with how to return the insurance after repaying the loan. In any of these cases it will be paid.
But there is one caveat. The insurance company takes its commission for handling the case. Typically, this amount is half or slightly more of the premium paid. If you believe that the calculation was made incorrectly, then be sure to ask to be provided with a detailed explanation and the tariffs at which the calculations were made. If the calculations are significantly overestimated or do not correspond to the declared tariffs, it is best to file a claim in court.
3. Termination of the contract without return of insurance. In general, the one who paid off the loan has the right to return the insurance. But there are situations when a refund is not made.
This happens when the contract stipulates that if the loan is closed early, the insurance company is not obligated to return the funds. If the client signs, then he completely agrees with this and accepts the terms. As practice shows, it is not worth going to court with such agreements, because nothing will be achieved anyway. If the insurance contract does not stipulate such a situation, then the refusal is unfounded. Therefore, you can safely go to court or Rospotrebnadzor.
How does the insurance company know about the intention to terminate the contract?
If you wish to repay the loan in advance for insurance issued on credit, the company can be notified in two ways.
- Insurance is taken out at the bank, which means that you can inform about your intention to terminate the contract in the same way. But very often it happens that applications are not accepted, and employees suggest contacting the insurer themselves.
- If you have a company office in your city where the insurance was issued, then it is best to contact them yourself. This way, you will submit your return application yourself and be able to ask all your questions. If there is no office, then you can send a letter by mail. It is better to ask that the letter come with a notification, so you can know that your request has been received and accepted.
What should everyone know about credit insurance?
Always remember that insurance is voluntary. It should not in any way influence the decision to grant a loan or the amount. The only exceptions are mortgage and car loans, where insurance is required by law. In addition, banks offer insurance for lowering interest rates. But these conditions must be specified in the contract, and the final decision is made by the client himself. If an employee says that insurance is a necessary measure, then ask to see the corresponding clause in the contract.
Think carefully about whether you really need insurance that much. If you do not need such protection, then you should not take out it, so as not to worry about the question of whether it is possible to return the loan insurance. You should also not do this if you know that you will pay off the loan earlier.
What should you check before purchasing insurance?
When deciding to take out insurance, be sure to check whether you can pay for it yourself. This way you won't have to pay extra.
You should also clarify how to return the insurance after repaying the loan. Ask to highlight such points in the contract.
Under no circumstances should you sign the contract if something doesn’t suit you, because if problems arise, it will all turn against you.
Why do banks need insurance?
Banks need loan insurance for their own safety. What if you don't want to pay the loan? In this case, the insurance company will compensate for losses.
According to the law, insurance is carried out only with the consent of the borrower, if we are not talking about collateral.
Most banks impose this service and force clients to enter into such an agreement. But when purchasing real estate or transport, it will be beneficial to both parties.
If unexpected situations arise (damage or destruction of the house), the entire debt is paid off by the insurance company. But, as practice shows, issuing such a policy is impractical and expensive.
If the borrower is sure that he will need to repay the loan early, then he will lose a significant amount during insurance.
It makes sense to agree to conclude an agreement when the loan is taken out for a long period and loss of solvency is possible. For example, dismissal from a job or layoff.
What features does an insurance contract have?
Very often, when applying for a loan, the borrower has to pay various fees, which the organization’s employees for some reason are silent about. These payments also include insurance payments.
Many borrowers are interested in the question: will the insurance be returned after repaying the loan? As a rule, this is done by submitting a written application to a bank or insurance company. If the organization refuses to return the funds, then a lawsuit is filed.
Before signing an insurance contract, be sure to carefully study its terms and conditions. It must indicate the amount of insurance, as well as describe the return procedure in different situations and the conditions for termination.
Whoever repaid the loan has the right to return the insurance, as well as put forward his own conditions, which he undertakes to fulfill.
The subject of this agreement may be:
- life and health of the borrower;
- real estate that is purchased with a mortgage;
- vehicles purchased with car loans.
These types of insurance allow you to pay off the debt in the event of an insured situation.
Is it possible to return insurance on a loan if it is paid off?
In case of full early repayment of the loan, the insurance contract is still valid. You can make a refund of funds paid to the insurance company for the time that has not yet passed.
As a rule, employees make calculations and return funds. But sometimes there are refusals to pay. Then you need to go to court.
Through the court, after repaying the loan, you can return the insurance only by its decision. In this case, all costs are paid by the company.
In some cases, the terms of the contract require that the policy be paid once a year. Then, if a question arises about whether you have the right to return the insurance, you can simply suspend payments.
In the absence of special conditions, it is automatically terminated. In such a situation, there will be no refund of insurance, but only termination of obligations.
What amounts are refunded?
When you wonder how to return insurance on a Sberbank loan, first study the contract. Often, the insurance company, agreeing to terminate the contract, seeks to return a smaller part of the amount. This is done by including your expenses in it.
There are no specific methods for calculating the amount required for insurance refunds.
In the event of early repayment, only the provision that allows funds to be withheld for the costs incurred to service the contract will be in effect.
If you need to figure out how to return insurance for a loan, and also make sure that the amount is calculated correctly, you should ask for cost estimates, the basis of which is the agency fee for supporting the contract.
How to return insurance for a loan if payment is refused?
Sometimes there are situations when a company refuses to refund insurance. Why is this happening?
- You missed the deadline to submit your application. It is submitted within a month from the moment the insured event occurs, unless otherwise specified in the contract. If you are unable to write a paper, be sure to let a company employee know and write down his information.
- The application for return of insurance does not contain the necessary data: number, date of the contract, data of the insured person, as well as the conditions and circumstances under which the insured event occurred.
- There are no documents confirming the fact of the accident. The documents differ depending on the situation. If incapacity for work occurs, a medical certificate is attached. In case of death, a certificate from the registry office is presented.
Conclusion
Be sure to read all terms and conditions before signing a contract. It is also worth including a clause such as the possibility of termination and adding return conditions. In such a situation, you will not have to worry about how to return insurance for a loan from Sberbank or another institution.
Such an agreement should be concluded only when receiving a long-term loan, that is, if you are not sure that you will close the loan earlier.
If you paid the debt in advance, be sure to write a statement and demand that the rest of the paid amount be returned.
If an insured event occurs, prepare all documents and submit them to the insurance company.
If the company did not return the entire amount, then write a claim stating that you do not agree. If there is no positive response, then you can complain to the court or the insurance supervision service.
Today it is almost impossible to get a loan from a bank without purchasing an insurance policy.
However, according to, only insurance of property, which is transferred to the bank as collateral, is mandatory. The bank has the right to offer other types of insurance to the borrower only on a voluntary basis.
Therefore, in order not to break the law, bankers try to stimulate the purchase of a policy with more attractive loan rates or the inclusion of insurance costs in additional banking services. As a result, borrowers are faced with the big problem of returning insurance money when repaying the loan ahead of schedule.
Grounds for early termination of the contract
If the loan is repaid ahead of schedule, the borrower has the right to demand the return of the insurance amount for the unused period of the contract. The basis for this is the norm of clause 3, the content of which is presented below:
Based on paragraph 1 of Art. 958, by repaying the loan before the term specified in the contract, the insurance risk also becomes insignificant. And according to paragraph 3 of this article, the insurer in this case can only receive part of the insured amount, but the rest must be returned to the insured person.
Clause 7 “On the organization of insurance business in the Russian Federation” also confirms the borrower’s right to receive funds for the balance of unused insurance days.
And finally, a letter from the Ministry of Finance of the Russian Federation from the insurer requires:
- Return to the borrower the balance of the unused portion of the insurance amount, reduced by the actual insurance period.
- Exempt the borrower from paying any taxes on this amount.
Will this fact affect your credit history?
The norm “On Credit Histories” provides for a specific template for the borrower’s credit history. It consists of several parts, one of which is informational.
The information part of the story includes the following information:
- information about all requests from the borrower to banks;
- refusals and approvals for issuing loans, indicating the reasons;
- Failure to make payments more than two times in a row.
The title and main sections of the credit history contain:
- personal data of the borrower;
- data on loans taken;
- amount of loans;
- percent;
- repayment terms, etc.
Only the borrower himself can familiarize himself with the additional part of the history; this section is closed to other persons. As you can see, there is no information in the credit history about the exercise of the borrower’s right to demand the return of the insured amount.
Therefore, there is no need to be afraid of spoiling it. Credit histories are stored in the BKI and the borrower has the right to review the document free of charge once a year and check the correctness of its completion.
Reasons for bank refusal to pay
If the bank’s additional services include loan insurance or the client’s health and life, then such an agreement is not drawn up directly with the client. The issuance of an insurance policy takes place between insurance and credit organizations, i.e. between legal entities.
With bank loan insurance, the return of insurance is very problematic.
After all, the wording here is completely different; it can be formalized in the form of a bank commission, organizational expenses, etc. And even by filing a claim in court, the borrower does not have the right to refer to the insurance law. In some cases, in order not to lose customers, banks make some concessions.
If the borrower writes a free-form application addressed to the manager demanding the return of paid additional services due to the early termination of the contract, then the bank may be loyal to this and pay some part of the money. But the decision on payment remains only with the bank.
Even if you file a lawsuit, you still will not be able to change the situation in your favor. The law does not prohibit banks from establishing commissions, bonuses, and reimbursement of organizational expenses.
Some banks still return a certain part of the money to their clients, which is stipulated in a separate clause.
For example, Sberbank’s “Collective Insurance Program for Individual Borrowers” provides for full early repayment of the loan. Based on clause 4.3 of the Program, the borrower has the right to receive an insurance amount calculated depending on the remaining loan term (see below).
If the client, within 14 days after the start of the agreement, writes a written refusal of this Program to the bank, then the entire amount taken for connecting to this service will be returned to him.
Who can help me get my money back?
And yet, how to return the loan insurance fee? If you have received a refusal by submitting a corresponding application to a creditor or an insurance organization, referring to clause 3 of Article 958 of the Civil Code of the Russian Federation, then it will be very difficult to receive the overpaid money for insurance.
However, by contacting an experienced lawyer, you can use two options to solve the problem:
- For the bank. The loan agreement contains a provision stipulating insurance for the entire period of the transaction. But if the contractual relationship is terminated, then, accordingly, the insurance contract must also be terminated.
- For an insurance company. The subject of insurance was the risk of non-payment of the loan. If the loan is repaid ahead of schedule, the insurance risk automatically disappears. This is stated by the norm of the Law in accordance with paragraph 3 of Article 958 (paragraph I):
Therefore, the insurer is obligated to recalculate and return the remaining insurance amount.
What to do if this service is included in an additional package
If the borrower has issued a credit line that includes a special insurance program, then the bank itself is the insured.
And since the borrower did not enter into any contract with the insurance company, then, accordingly, he cannot appeal to it regarding early termination.
The bank included the insurance amount in the loan servicing as a commission fee. Another trick of the bank is the so-called “Package Services”, which the lender sells when applying for a loan. This includes, in addition to insurance, a whole range of additional services. This includes SMS sending of information, issuing debit cards and much more.
In this case, it is impossible to refuse only the insurance from this Service Package. And if you refuse the entire Service Package, the bank will most likely refuse to issue a loan.
For the consumer of banking services, there is one way out of this situation - to appoint himself as a beneficiary. This means that the insurance premium will be paid to the borrower.
Based on the norm in clause 2, the borrower, when taking out insurance, has the right to determine the beneficiary and this should be done before concluding a loan agreement.
Before signing the documents, carefully read all points of the document. Pay special attention to the list of paid additional services and whether you are connected to an insurance program.
If you do not see the need to provide any of the services, refuse immediately.
To do this, you should submit an application in any form to the bank for refusal of additional services, as well as for the return of an equivalent part of the funds. Submit the application either by registered mail or in your own hand to the bank with a note indicating its receipt.
If the bank makes a negative decision on your application and refuses to return part of the amount, feel free to contact the court and Rospotrebnadzor.
To take part in the trial of a representative of Rospotrebnadzor, you can, in accordance with, submit a corresponding application to the court. The supervisory authority’s specialist will give his opinion on the legality of the bank’s decision, which will significantly influence a positive court decision in your favor.
Refund of part of the insurance
How to return life insurance on a loan if the contract provides for the case of early repayment of the loan? There are certain time frames, as well as conditions for the return of insurance money specified in the contract.
So, if the client submitted an application to the insurance agency or the bank (provided that the bank is the policyholder) no later than 1 month from the date of conclusion of the contract and the defendant’s issue was resolved positively, then the funds are transferred to the specified bank account of the borrower. But services for drawing up the contract will be deducted from the refund amount.
If a month has passed and the client has asked to return the money due to him, the amount will be reduced in proportion to real time.
The defendant's decision is usually made within 1 month. If the decision is positive, the money is transferred to the client’s account, and if it is negative, the client has the right to appeal to the courts. The period for consideration of a claim is regulated by the legislation of the Russian Federation.
The conclusion is this: a refund of insurance money is possible if it is stipulated by the contract. Otherwise, the decision is made by the policyholder and the decision he makes depends only on his loyalty. Going to court does not always bring results.
This leads to the following conclusion:
- carefully study the contract;
- weigh the possible benefits against the inevitable risks;
- Only then sign the contract.
Where to contact
When claiming overpaid insurance money, borrowers must contact Rospotrebnadzor and the court.
Immediately after closing the credit line, you must collect copies of the following documents:
- loan agreements;
- passports;
- a certificate issued by the bank stating that you have fully repaid the loan (sample below):
In addition to these documents, you should write an application addressed to the insurer requesting that you terminate the insurance contract early and return part of the insured amount (see below for a sample application).
It is worth paying attention to the fact that, based on practice, borrowers often make a typical mistake. Even if the insurance was issued by an insurance agency, the borrower still requests a refund from the bank.
This step is justified only if the bank acted as an insurer. But in other cases, you should only contact the insurance company.
Application to the bank. Pre-trial dispute resolution
To resolve the issue of returning the insured amount, the borrower must contact the bank (if the bank was the insured) with an application or claim, a sample of which is presented in the file below.
The application must be completed in two copies, one of which must have a bank employee’s mark of acceptance. If it is not possible to bring the application in person, you can send it by registered mail with postage paid for receipt by the addressee.
Additionally, you should make an inventory of the attached documents. In parallel with filing a claim with the bank, you need to submit an application for complete information on the movement of funds in your personal account. If you receive a refusal, contact Rospotrebnadzor.
Contacting regulatory authorities
The activities of financial and credit organizations are controlled by Rospotrebnadzor. Therefore, a similar application that you submitted to the bank should be sent to Rospotrebnadzor, a sample of which is presented below.
A copy of the complaint to the bank with its response should also be attached to the application.
Lawsuit
The borrower can apply to the courts without submitting an application to Rospotrebnadzor. To have your case considered in court, you must submit a statement of claim, which is presented in the file below.
Download .
Minimum required documents
In addition to the statement of claim, the following documents must be submitted to the bank:
- credit and insurance agreements;
- a certificate from the bank confirming early repayment of the loan;
- settlement part as an addition to the claim;
- a copy of the application requesting the return of insurance costs to the bank with its response;
- a copy of a duplicate of the insurance contract (if any);
- a copy of the application to the insurance agency with its response.
To summarize, the conclusion is this: if the contract contains a clause on the return of part of the insured amount if the loan is repaid before the due date, then such a document can be signed without a doubt.
If the terms of the contract exclude such a possibility, then in this case you need to be prepared to go to court and Rospotrebnadzor or rely on the loyalty of the insurer, or even refuse the overpaid money.
Video: How to return loan insurance and how Banks rip us off.
Loan agreements are often issued together with insurance services. Additional insurance is not a prerequisite for obtaining a loan, but thanks to it, the bank reduces its own risks, which allows it to make more favorable offers with a lower interest rate. During the entire insurance period, the borrower can claim payment if an insured event occurs. But is it possible to return the insurance after repaying the loan?
Types of contracts
Before specifying how to return the insurance after repaying the loan, you must first carefully study the terms themselves. Insurance is provided by an insurance organization, which must transfer the policy, contract or insurance rules to the client or post the terms of the contract in the public domain on its website.
A bank is a credit organization; it does not have a license to carry out insurance activities, but the company can act as an intermediary or a direct participant in the contract. All insurance under the terms of consumer lending in the personal market can be divided into two types:
- Individual contract. It is drawn up between the loan borrower and the insurer without the participation of the bank, i.e. it is an agreement between an individual and a legal entity. A characteristic feature is that the policy is handed over to the client. The beneficiary, as a rule, is the client.
- Collective agreement. It is drawn up between the bank and the insurance organization. The borrower, based on a written application, requests to join himself to this insurance. Thus, this is an agreement between legal entities - a bank and an insurer. A characteristic feature is the absence of a policy or contract; only an application is issued.
To clarify whether the insurance can be returned or not, you should study the relevant section, which regulates the conditions for termination of the contract. If such information is not presented in the documents that you have on hand, then you should find the general insurance rules on the insurer’s website.
The bank issues a loan with the risk of losing money. Insurance services reduce these risks, which allows the financial organization to feel more confident and make more loyal offers. The banking company has no right to impose insurance as a mandatory condition. This is an additional service. But banks may offer a tariff with a more favorable interest rate, which includes insurance.
The bank has no right to refuse to issue a loan on the basis that the client does not want to sign an insurance agreement. On the other hand, the banking company may not finance the transaction without explanation. In this case, the situation becomes stalemate. And the borrower, willy-nilly, agrees to all the proposed conditions.
Proving that an insurance service is imposed is quite problematic. Since in the documents both the bank and the insurer indicate that the client is fully familiar with the conditions and agrees and accepts them. A good proof would be a video or audio recording where the registration specialist openly states that the bank will refuse to lend if you do not sign the insurance.
The legal basis is not on the client's side. Thus, Article 958 of the Civil Code provides that in the event of early termination of the contract, the amount of the paid premium is not subject to return, unless the contract provides otherwise. As a rule, insurers do not offer anything else.
Thus, the loan agreement is closed ahead of schedule, and the insurance company does not return the amount of the paid premium on completely legal grounds. The contract may continue to be valid, and in the event of an insured event, the insurer will pay the amount of the principal debt based on the first payment schedule for the repaid loan.
Therefore, after the conditions are fully studied and there is a section on returning part of the premium, it will become possible to receive the money. In this case, it will be possible to return the insurance not in its entirety, but a certain percentage and in proportion to the unexpired validity period. Funds are returned only to the beneficiary.
Therefore, in case of individual conditions, the insurer can transfer money directly to the client to his bank details. In the case of a collective agreement, the amount will be returned to the repaid loan account. Then just transfer them to your personal account.
So, let's look at the procedure that will be needed to get your insurance back.
- First, you need to completely close the loan, and do it before the deadline in the original payment schedule.
- After you have made sure that the loan agreement has been repaid and is considered closed by the bank, you should contact your insurer.
- To return the insurance, you must write a corresponding application. This can be done at the branch of the insurance company. If there is no representative office in a particular region, then you can send a signed copy of the application yourself to the legal address of the insurer by registered mail via mail. Most often, the insurer and the bank are part of the same group of companies, so such requests can also be written through bank branches, which will independently transmit the documents.
- Then wait for the money to be returned. Financial institutions have a period of 30 days to do this according to the law. However, if necessary, the terms can be extended by another 30 days, but, as a rule, the money arrives faster.
To complete the application, it will be enough to have your passport with you. The text of the application must contain the client’s passport data, the requirement to return the unused part of the premium based on the clause of the agreement regulating the return, the agreement number, account details where the funds will be transferred, signature and date of writing the application must also be indicated.
The insurer may refuse to pay if so provided for in the terms and conditions. It is necessary to receive an official response from the insurance company in order to accept it for further work. To do this, you will need to make an official request by writing an application to the legal address.
Any bank, when issuing a consumer loan, tries to protect itself from possible force majeure by openly imposing life insurance services on the borrower. There are cases when a loan agreement was drawn up without disclosing the insurance amount included in it. Today you can return your loan insurance and get your money back.
Refund Terms
Since 2016, it has been possible to return the money paid for insurance within 5 days after the agreement is signed if the policyholder changes his mind and decides to refuse the service. Starting January 1, 2018, this cooling period has been increased to 14 days.. It is important to remember that this period is not provided for when signing collective insurance agreements.
Long-term housing lending - a mortgage - requires mandatory insurance. Refusal to pay it is impossible. You can only request a recalculation if the borrowed money has been fully repaid in advance.
To get your insurance money back, you must fulfill 2 simple conditions:
- Compile and submit an application for refusal of insurance, indicating the personal data of the policyholder and the current account for payment.
- Meet the deadline- 2 weeks;
If the cooling-off period is missed, you should first contact the bank. Sometimes it is he who can get rid of insurance services even after 2 weeks. For example, this practice was noticed in Home Credit Bank, Sberbank and VTB.
It is legally established that the refund of the amount paid must be made within 10 days.
The amount of the refund depends on the entry into force of the agreement. If its effect has not yet begun before submitting the application, 100% of the amount deposited by him will be transferred to the policyholder’s account. Otherwise, the insurer has the right to receive part of the funds received to pay for the insurance.
How to get your insurance back if you repay your loan early
According to the law, a refund of the unused insurance amount upon early repayment of the loan is possible. At the same time, the bank’s contractual documents may contain independently established rules that exclude this possibility. In this case, a refund will be refused.
If special conditions are not provided by the bank, then if the loan is repaid ahead of schedule, the insurance contract can be terminated before the specified end date, payments on it are stopped, and the amount is recalculated. Unreasonably paid funds will be returned to the borrower's current account.
You can return 100% of the insured amount if all borrowed funds were paid within the first month (maximum 2) after registration of the contract. Otherwise, the insurer may reimburse only part of the amount, citing all sorts of administrative costs associated with the service provided. Moreover, for a partial refund of the money paid for insurance, it is most likely that they will be returned if no more than 36 months have passed from the date of execution of the loan agreement.
How to get your insurance back after paying off your loan
To return the loan insurance after repayment, you must:
- Review the insurance agreement regarding the possibility of refunding insurance. If you have any questions, contact the bank.
- Submit an application for early repayment loan, receive your current account details and documents confirming the full closure of the loan.
- Contact the insurance company, with whom the insurance contract was concluded and inform about the intention to return the funds paid for the insurance.
When drawing up an application for compensation of the insurance amount paid, pay attention to the presence of the following data:
- Name of the bank where the loan was issued;
- Full name of the policyholder, passport and contact details;
- Number and date of the agreement, its validity period;
- Terms of the agreement, calculation of money paid under it;
- Requests for the return of funds, their justification;
- Details of the account to which payment will be made;
- A list of documents (it is better to provide copies) that will confirm the possible payment.
The application is drawn up in 2 copies and notarized. A statement confirming the absence of debt is attached to the document.
List of required documents
To apply for a refund of loan insurance after its repayment, you must provide the insurer with the following documents:
- Passport of a citizen of the Russian Federation;
- Loan agreement;
- Insurance policy;
- Statement of absence of loan debt;
- Receipts for payment of insurance premium.
To return insurance after repaying the loan, you should contact the insurance company, and not the bank (unless insurance is not included in the list of services it provides).
After submitting all documents, you will need to wait for a response from the insurer. In case of refusal to return the funds, the policyholder has the opportunity to claim them by filing a claim in court. It is important to note that the costs of legal proceedings are borne by the plaintiff. Therefore, before contacting legal authorities, it is necessary to compare the amount of possible expenses and refundable funds.
Failure Cases
Refusal to pay funds deposited into the insurance account may be received if:
- Mortgage issued, providing for compulsory insurance. Recalculation of the insured amount is possible only in case of early payment of the entire amount.
- The application was submitted after 30 days from the moment of occurrence of the insured event.
- The application was completed with errors- there is no date and number of the contract, information about the policyholder, date of occurrence and details of the insured event).
- Missing documents, confirming the fact of the occurrence of an insured event (statement of absence of debt).
In all of the above situations, even in court, it will not be possible to appeal the organization’s decision.
Many borrowers who have at least once taken out a loan have thought about how to get their insurance back. Such a question may arise within a few days after the loan agreement is drawn up, or after the scheduled or early repayment of the loan. As a rule, this is due to the fact that when applying for a loan, managers mislead clients regarding the cost of this service, or are silent about it altogether. However, there are legal ways to refuse imposed insurance.
Bank managers can assure you that this is a mandatory service; without it, a loan cannot be issued. But in fact, this is a voluntary service; the citizen himself decides whether it is needed or not.
Unfortunately, many citizens are not very experienced in this matter, and bank managers know how to persuade, they even undergo special training on selling additional services. Sometimes citizens realize the fact of purchasing insurance after concluding a loan agreement. They are interested in the return of the imposed insurance; they understand that they do not need it at all. and the borrower is faced with the question: “Is it possible to refuse loan insurance after receiving it?”
At the beginning of the summer, a law allowing the return of insurance came into force. For many borrowers, this issue is really relevant, so I decided to break down the return process and talk about the new law, which makes it easier to return money for an unnecessary service.
Insurance Law
Previously, if a person signed an application for insurance when applying for a loan, there was practically no reversal. After contacting a bank or insurance company, citizens received a categorical refusal: the application for insurance was signed personally by the borrower, no one held him at gunpoint, the action was voluntary. The issue could only be resolved through court, but you still need to prove that the service was imposed on you. But some banks still provided the opportunity to hassle-free return of money for insurance within a certain number of days. But this is more the exception than the rule.
On June 1, 2016, the Bank of Russia, which regulates the insurance market, announced that citizens who purchased a policy can return it and withdraw the money paid. A cooling period of 5 days was introduced. During this period, a person can change his mind and contact the insurer, who is obliged to return the money. From 2018, the “cooling off period” was extended to 14 days. According to the law, insurance refunds are carried out quickly, the money is transferred to the applicant within 10 days.
What types of insurance can be returned in 2019?
In the field of lending, there are not only voluntary, but also mandatory types of insurance services that accompany secured loans. We are talking about the following policies:
- CASCO. When applying for a car loan, the bank has the right to oblige the borrower to insure the purchased car. The transport remains pledged, the bank must be financially protected;
- Real estate insurance. Relevant for mortgages and loans secured by real estate, the collateral must be protected.
Other types of additional services that usually accompany the conclusion of a loan agreement are voluntary. It is possible to return insurance through credit cards, cash, trade loans and other programs. They are accompanied by:
- life insurance of the borrower (death, incapacity, disability);
- insurance in case of job loss, layoff;
- title insurance relevant to mortgages;
- protection against financial risks;
- property insurance (lately also often imposed by banks).
Is credit insurance legal? In any case, yes. This is an additional service that is offered to a person when concluding a loan agreement. If it is not mandatory, the borrower can refuse it. If you do not buy a mandatory policy, money will be denied. By offering insurance, the bank does not violate anything. Below we will consider the question of how to refuse credit insurance after receiving a loan.
Insurance refund within the first 14 days
Refund of insurance through the court in this case is not relevant. If you meet the cooling period prescribed by the Central Bank, everything goes much easier.
Step-by-step instructions on how to get your insurance back:
- You need to meet 14 days, which begins the report from the date of signing the insurance application.
- You should contact the insurance company and write a statement of refusal from the voluntary insurance contract. Refunding the money for the service is the responsibility of the insurer; all issues are resolved with him, and not with the bank. The application must indicate the details for transferring the returned funds.
- Within 10 days, the citizen must receive funds for the unnecessary service.
Please note that the insurance issued by the bank may become valid within these five days. Accordingly, a citizen uses the services for several days, then a slightly smaller amount is due for refund than was paid. The insurer will calculate the price of the service for these few days and deduct the corresponding amount from the refund amount.
Instructions on how to return insurance are not regulated. It is possible that some banks will allow this operation to be performed through their offices. In addition, the offices of insurance companies are not always located in the client’s city of residence; then the application is sent to the organization by registered mail. I would only recommend sending a letter with a notification and an inventory so that you have proof of your request for a refund.
Nuances in the law on the return of insurance during the “cooling off period”
The new law does not apply to collective agreements. The rules apply if an individual enters into an agreement with an insurance company. And banks began to sell additional services within the framework of a collective agreement, which does not fall under the law on the return of money within 14 days. In fact, the bank is the policyholder, and the borrower simply joins it. Refunds of insurance under collective agreements are not possible during the cooling-off period. VTB Bank is now famous for this type of insurance. Therefore, if you took out a loan from VTB on February 1, 2017, then they have collective insurance, which is practically impossible to return. Be careful!
Refund of insurance for outstanding loan after 14 days
If more than five days have passed since the service was issued, the return does not fall under the new law. You don’t need to immediately think about how to get your loan insurance back through the court; first, contact your bank. Now some organizations, in order to increase loyalty, provide the opportunity to refuse additional services even for a period exceeding 14 days. For example, this applies to Home Credit Bank, Sberbank gives 30 days for a return, this is also true at VTB (under agreements executed before February 1, 2017), and in some others. Not all lenders are so loyal; if you study customer reviews, Renaissance Credit, which is popular among borrowers, does not offer repayment, as do dozens and even hundreds of other institutions.
If you send a claim to the bank, in almost 100% of cases it will be refused, and the refusal will be justified by the fact that the citizen himself signed the application for insurance. In this case, if you are sure that you are right, you cannot do without a trial. Then it is better to return the insurance through lawyers, maybe they will find some loopholes. But in fact, it is difficult to actually receive money: the person himself agreed to the service and paid for it.
Refund of insurance upon early repayment
If I repay the loan early, will the insurance be returned? This also often worries citizens. The policy is initially issued for the entire loan repayment period. Accordingly, if a person repays the loan in full ahead of schedule, he can receive back part of the payment for insurance services. For example, the loan was taken out for 2 years, the citizen paid 40,000 rubles for insurance. The borrower closed the loan within a year, and accordingly, next year he will not use insurance services, so he is entitled to a refund of 20,000 rubles.
In the question of how to return insurance after repaying a loan, if it is repaid ahead of schedule, you should initially contact the bank. Application for refund of loan insurance is written immediately when writing an application for early repayment of the loan or is drawn up after the loan is closed. The bank has the right to send a person to resolve the issue of return to the insurance company.
Should I return the insurance myself or through lawyers?
To return the loan insurance, you are given 14 days, and in this case, the help of a lawyer is not required at all. But if the contract is still in force, and more than five days have passed since its conclusion, then the process will be difficult and sometimes impossible. If the bank refuses your claim, then it is better to contact lawyers, they are more savvy in this matter.
Advice for the future: how to buy on credit or in installments without insurance?
It is no secret that the bulk of imposed insurance comes from consumer loans for goods and services, which are issued in stores. For example, it was almost impossible to buy a TV, refrigerator or other item on credit or in installments without overpayment. They will definitely include insurance, which you then have to cancel.
But relatively recently, a modern way of making purchases in stores in installments without overpaying without imposed insurance services has appeared. To do this, it is enough to have an installment card, with which you go to the store, choose an item and pay at the checkout with this card. The purchase amount is divided into several parts and you make a monthly payment to the card. The card is absolutely free and without additional services.
In this financial blog you can find review articles about installment cards.
Feedback-opinion
I can advise citizens only one thing - in order not to waste time on paperwork and running around, it is better to immediately categorically refuse the offer of additional services. But if you still bought a policy you don’t need, now you don’t have to spend a lot of effort to get your money back. The Bank of Russia really provided great help to borrowers by allowing them to repay their money within five days. But if you do not meet this deadline, the chances of a refund are extremely small, and sometimes even impractical, given the possible costs of lawyers and the organization of the trial.
In conclusion, I recommend watching a video of a lawyer who gives very useful advice:
