Consultation of the Commission regarding the proposed directive aligning Member States' laws to safeguard employees from potential hazards stemming from digital communication networks.

In Germany, there are approximately 1.5 million ongoing contracts for credit insurance, a type of risk insurance that covers loan installments in case of illness, unemployment, disability, accident, or death. This insurance can be particularly beneficial for sole earners in a family, as it helps protect their dependents from financial difficulties in case of default.

When a customer's payment ability is weak, some banks may require residual debt insurance. This insurance can help individuals secure a loan if their creditworthiness alone is not sufficient. However, it's essential to note that the cost of residual debt insurance can vary greatly, potentially making up 20% or more of the total loan amount.

The fees for residual debt insurance are usually added to the loan amount, increasing the monthly loan installments. For instance, in an example given, the insurance increased the monthly rate by around 30 € over a 6-year term, amounting to an additional burden of nearly 2,400 €.

The scope of insurance is crucial. Residual debt insurance pays out when the borrower cannot continue paying the loan installments due to events such as job loss, illness, or death, covering the remaining debt balance in these cases. It's important to understand the specific conditions under which the insurance will be activated and for how long the provider will intervene.

Before signing up for a residual debt insurance, comparing offers from different providers and reading the fine print attentively is recommended. It's also worth considering alternatives like risk life insurance, which is a cheaper option, costing less than 10 € per month.

It's also noteworthy that the lender must only include the costs of a residual debt insurance in the effective interest rate if they insist on taking out such a policy. This means that the total cost of the loan, including the insurance, should be transparent.

Lastly, residual debt insurance remains valid when refinancing a loan. If you refinance or repay the loan early, you can cancel the insurance at the end of a month and reclaim the pro-rated premiums.

In conclusion, while residual debt insurance can provide peace of mind and financial security, it's crucial to understand its implications on the total cost of the loan and monthly rate. Careful consideration and thorough research are key when deciding whether to take out a residual debt insurance policy.