Group Credit Life Insurance for Lenders | Reduce Default Risk

🪝 Introduction

What happens when a borrower dies with an unpaid loan? The burden either falls on the family or becomes an NPA on your books. But what if every loan disbursal came with a protective shield?

Group Credit Life Insurance is emerging as a powerful tool for NBFCs, MFIs, and banks to safeguard against borrower death risks. It’s time to turn liabilities into secured lending assets with insurance-driven loan protection.

Table of Contents

1. What is Group Credit Life Insurance?

2. Why NBFCs and Lenders Must Pay Attention

3. How It Works

4. Benefits to Lenders

5. Benefits to Borrowers

6. Group Credit Life Insurance vs. Individual Life Cover

7. Real-World Use Case: NBFC Securing ₹50 Cr Portfolio

8. How to Implement It with Xurance

9. FAQs

10. Conclusion: So What, What Next?
    

🔍 1. What is Group Credit Life Insurance?

Group Credit Life Insurance is a policy taken by lenders to cover a group of borrowers under a single master policy. If a borrower passes away during the loan tenure, the insurer pays off the outstanding loan amount.

💼 2. Why NBFCs and Lenders Must Pay Attention

• Rising NPAs

• Lack of borrower awareness

• Burden on co-borrowers or guarantors

• Increasing demand for credit life bundling

"Credit life is not just protection; it's peace of mind for both lenders and borrowers." — Tarun Kumar, Xurance

⚙️ 3. How It Works

Step	Description
1	Lender ties up with insurer (via Xurance)
2	Borrower enrolled during disbursement
3	Premium collected (either paid by borrower or funded)
4	Policy issued instantly
5	In case of borrower’s death, claim settled to lender up to outstanding loan

Calculate your Loan Portfolio Insurance Premium

🏦 4. Benefits to Lenders

• Lower NPAs

• Guaranteed claim settlement

• Better portfolio quality

• Confidence in underwriting small-ticket loans

• Higher customer trust and satisfaction

👨‍👩‍👧 5. Benefits to Borrowers

• Family is not burdened with loan

• Transparent protection

• Affordable cost

• Peace of mind

• Quick claim processing

⚖️ 6. Group Credit Life Insurance vs. Individual Life Cover

Parameter	Group Credit Life	Individual Life Insurance
Coverage	Loan-linked	Family protection
Premium	Lower (bulk rate)	Higher
Tenure	Loan tenure	Long-term (10-30 yrs)
Medical Check	Usually not required	Sometimes required
Convenience	High (bundled with loan)	Requires separate purchase

📈7. Real-World Use Case: NBFC Securing ₹50 Cr Portfolio

A Tier-2 NBFC tied up with Xurance to cover all disbursed personal loans. Within 6 months:

• Covered over ₹50 Cr of portfolio

• Reduced NPA by 18% in high-risk segments

• Claims settled: 3 cases, ₹42 lakhs paid

🔧 8. How to Implement It with Xurance

At Xurance, we simplify group credit life insurance for lenders. ✅ API or Excel-based onboarding ✅ Instant policy issuance ✅ Zero paperwork ✅ Transparent commission structure ✅ Claim support within 24 X 7 days

❓ 9. FAQs

Q: Who pays the premium — the NBFC or the borrower? A: Both models are possible. Some NBFCs pass the cost to borrowers; others absorb it for risk management.

Q: Can we issue policies in bulk? A: Yes, our tech stack allows API and Excel uploads.

Q: What if the borrower prepays the loan? A: Refund of unused premium can be processed on a prorated basis.

✅ 10. Conclusion: So What, What Next?

Group Credit Life Insurance is not a “nice to have”—it’s a must-have. With rising default risks and borrower unpredictability, it gives NBFCs the shield they need.

So What? You can reduce NPAs and protect every rupee you lend. What Next?👉 Book a 15-min demo with Xurance to get your loan portfolio insured today.