Rescinding or Giving Notice on Credit Life Insurance

Use

If the borrower wants to withdraw from a credit life insurance policy that he has concluded in connection with a loan contract from the category Consumer Loans (340) , you can cancel or give notice on the policy.

Note Note

If the credit life insurance was seen as absolutely necessary when the loan contract from the underlying product was concluded, you can only rescind or give notice on the credit life insurance together with the actual loan contract.

End of the note.

The rescission is only possible within the rescission period. If the rescission period has passed and your company has not recognized the rescission, taking any goodwill agreements into consideration, you can suggest that the borrower give notice of rescission of the credit life insurance.

Rescinding the insurance contract renders it ineffective. The borrower does not incur any costs.

Giving notice of cancellation allows the borrower to terminate the insurance contract prematurely. The borrower incurs costs, such as charges and the proportion of the CLI single premium calculated on the basis of pro rata temporis for the time between the full disbursement of the loan and the key date of the notice.

Prerequisites

  • You need to define the Rescission Period and the Notice Period in the IMG activity Define Rates for Credit Life Insurance in the Customizing for Loans Management .

  • If you want to use the release function in connection with the rescission, you must set up the release for the release object VDARL ( Loan Master Data ) in the Customizing settings for Loans Management . For more information, see Release .

Procedure

  1. In the function Change Consumer Loan choose Start of the navigation path Edit Next navigation step Rescind / Give Notice on CLI. End of the navigation path

    The Rescind / Give Notice on CLI screen appears. The rescission is pre-selected.

  2. Enter the Declaration Date and choose Proposal or Enter to have the system calculate the proposal.

    If the loan has not been disbursed, you can rescind the credit life insurance at any time.

    If the loan has been disbursed, the system checks whether the date is within the rescission period and displays the result in the text field.

    • If the rescission is possible the rescission stays selected. The system also specifies from which date it would be possible to give notice instead of rescinding the contract.

    • If the rescission is not possible or is subject to the release procedure, the system proposes giving notice on the calculated notice date and displays the CLI rebate amount. If you choose Rescission despite this, the system forwards this as a work item for Release .

  3. Execute the rescission or the notice by choosing Execute .

    The system displays a message and switches to display mode.

Result

You have rescinded or given notice on the credit life insurance. You can enter a life insurance policy for the same loan again. For more information, see Processing Credit Life Insurance .