Credit Insurance

Overall Rating: star ratingstar ratingstar ratingstar ratingstar rating[5/5]Total Votes [ 1 ]  
Rate this page:
Credit insurance takes care of the risk of payment of the organizations and not of the individuals. To get insured, the holders of the policy should have a credit limit on each of the buyers. For Credit insurance, the rate of premium is kept low. It combines both Credit Life Insurance and Trade Credit Insurance.

Credit insurance involves trade with a single buyer. The concept of this insurance was first incepted in the nineteenth century. During the time of first and second World Wars, the idea was conceived in the Western Europe. The various companies that were developed during this time offered credit insurance to the individuals.

If the borrower of the loan dies or gets disabled then the insurance will pay the loan off. Trade Credit Insurance covers the risk of the payment during the time of delivery of services and goods. Private individuals are not provided with the facilities of this product.

Premium is charged monthly against the issuance of the credit insurance. This insurance is a business driven by broker, who helps in the creation of market competition among the policy holders for better premium and policy wordings.

Credit Insurance is the best way to manage credit risk in a cost effective way for any organization. It provides financial assistance during the time of any credit risks and overdue payments during domestic trade or exports. Before granting covers for the insurance various terms and conditions need to be fulfilled.

Credit insurance is one of the important types of insurance that covers risk against the following:

  • Trade Receivables
  • Portfolio
  • Business-to-Business Transactions
  • Short Term Credit Risk
Credit insurance offers a number of benefits, which are available in the form of
  • Risk Mitigation
  • Efficient collection of debts
  • Complements credit management of the seller
  • Enables development of new markets against protection provided
  • Expert advice since buyers are analyzed for credit worthiness

The major Credit Insurance providers in India are ICICI Lombard and The New India Assuranc.

>> More About Insurance