What about death after taking out a loan?

When you take out a loan, you commit yourself to repay the amount of money in the future. Whether you start repaying immediately or wait a while: the money has to be repaid. You often take out a loan for a longer period. It is probably one of the last things you think about when taking out a loan, but what happens when the insured dies suddenly? Then it may be that the next of kin for the repayment obligation. A small amount can still be coughed up, but when it comes to large amounts, it is of course very annoying. After all, your next of kin often have enough monthly costs. If there is also a high repayment debt, that can cause financial problems.


One of the ways not to saddle your next of kin with your loan is to have the amount scolded. Some providers have their own conditions and will waive certain personal loans or revolving credit in case of death. Often, however, a maximum limit has been set. Cancellation is often only with small loans. For example, you may not have passed over a specific age limit.

Debt balance insurance

Another way to ensure that your relatives do not have to repay your residual debt is through a debt balance insurance policy. This insurance has been specially created to cover the death of an insured person. You take out insurance to ensure that your dependents do not have to pay for your loan. The debt balance insurance is an agreement that you enter into with the insurance company, whereby the insurer pays the balance due to the lender, if you die prematurely. You can have this amount paid in one go, but it is also possible to work with annual premiums. You can also choose to have only part of the debt settled by the insurer. This is possible when you are insured for, for example, half of the loan.

You can also opt for a mixed life insurance policy. The insurer not only pays out if you die, but also ends at the end of the term, even if you are still alive. Actually this is a life insurance policy that also pays out when you die if your loan is still running.