Domestic credit insurance vs trade credit insurance

Domestic credit insurance vs trade credit insurance

Moti Grauman | May 7, 2019

Whether you are thinking about your personal life and well-being or the survival of your business, insurance has become a necessity in both our personal and professional lives. Your business needs to be insured against a variety of risks that it is inadvertently exposed to and exactly the same goes for your personal life – however, these risks might not be the same, which means that your insurance needs will be different. Let’s talk about domestic and trade credit insurance.

 

Domestic Credit Insurance

This type of insurance is purchased by individuals to pay off any existing debts in the event of death, disability or in some cases, unemployment. This leaves your loved ones with less to be worried about during an already difficult time. There are three main types of domestic credit insurance:

  1. Credit life insurance

This insurance pays off loans in the event of your death.

  1. Credit disability insurance

Should you become disabled, this type of insurance covers you for up to the loan’s minimum monthly payment. There are often waiting periods involved in the pay out of disability premiums.

  1. Credit unemployment insurance

 

Should you be retrenched or become otherwise involuntarily unemployed, this type of insurance pays out a monthly benefit. Similar to the disability insurance, you would need to adhere to a waiting period before expecting pay-outs.

When taking out any form of domestic insurance, ensure that you are familiar with the terms and conditions of your policy.

Trade Credit Insurance

If you own a business, chances are excellent that you will need trade credit insurance to protect your business.  There are various reasons your business needs trade credit insurance, some of which include the following:

Customer payments

If you are a small business owner, you know that if too many of your customers pay their debts late, your business will not survive. Trade credit insurance protects you against this and turns the insurer into your ally in terms of recovering funds.

The ever-changing market

Part of an insurer’s job when you are covered under a trade credit insurance policy, is to stay on top of changes in the market and analyse how it might impact on your business. This helps you project and plan for growth with verified and reliable information.

Added value

Credit trade insurers can also perform credit checks on prospective customers, which means that you will have access to the customer’s credit status to set a realistic credit limit. Insurers can also flag potential financial problems found with the credit bureau and advise you accordingly.

When considering trade credit insurance, ensure that the unique needs of your business is taken into account when designing the policy, to ensure that you don’t end up paying for benefits you do not need.

In today’s difficult economy, it has become vital to cover any and all assets, in order to mitigate the risk of loss. Make sure you rely on a trusted name in the industry to see to your insurance needs – contact Credit Guarantee today!

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