The role of a SACCO is to take deposits and issue loans to members. When applying for a loan, members are required to provide who legally guarantee that they will repay the loan to the SACCO in case of default by the member taking out the loan.

However, there are unforeseen circumstances that may lead to loan default such as death or permanent disability of the borrower. Such loans are unlikely to be repaid, and this may pose serious threat to the SACCOs survival. This is where Insurance for SACCO loans come in. This cover is issued by Life Insurance companies.

What is SACCO Loan Insurance?

This is an annual insurance cover taken by the SACCO to ensure that in the event of death, total permanent disability, or critical illness of a member with a running loan, the outstanding loan amount will be repaid by the insurance company. This serves to protect the SACCO from loss of funds and ensures continuity for members. It also relives the guarantors and the borrower’s family of the loan liability.

Benefits of a SACCO Loan Insurance

• It provides the SACCO with financial security from loan defaults in the event a member with a loan passes on. The insurance company will pay outstanding loan amounts to the SACCO.

• It offers financial relief to the borrower’s family as it eliminates the burden of paying the outstanding loan amount.

• It is an affordable insurance cover as it works on a group buying principle.

What is covered under SACCO Loan Insurance?

SACCO loan insurance primarily covers death due to illness or accidents, ensuring loan repayment is not a burden on the borrower's family.

Additional optional benefits include:

• Permanent Total Disability Cover: Pays outstanding loans if the borrower is permanently disabled.

• Critical Illness Cover: Pays upon the first diagnosis of specific illnesses like cancer, stroke, or heart attack.

• Last Expense Cover: Provides funeral expense benefits within 48 hours of death notification.

• Deposit Protection: Ensures loans secured by member deposits or guarantors are settled by the insurer, not the securities.

Read more about how your SACCO can sign up HERE