The new insurance product: consumption credit insurance for individuals will be issued first time in Beijing.

Based on individual credit, clients will be granted small amount of loan from banks in 3 to 4 days without any guarantors and mortgages. Ping An Insurance Limited has received the permission to issue this consumption credit insurance in over 20 areas, such as Beijing, Tianjin and Zhejiang Province.

There will be some thresholds for the insured, for instance, the insured must be China citizen, in age of 21-55, and the average monthly income should reach RMB.2000, and has good credit record in central bank. The insured should offer valid ID card, certification from its employer and salary invoice for the last three months in order to get the loan from the bank within 3 to 5 working days. The ceiling of the loan will be RMB150000. The premium will be deducted once the insured get the loan.

The professionals in Ping An Insurance Limited explained that the target of this product focus on the clients at the middle and low level of credit market, who may not go through the investigation procedure of the bank and get the loan directly. The advantage of this insurance is that there is no guarantee requirement as the pre-condition of the loan. What is more, the procedure will be faster and the insured may get the loan 3 or 4 business days after application.

However, despite the threshold of purchasing the insurance and getting the loan is low, the creditors’ actual cost is not so. The creditor should pay premium and loan interests, which means that he has to be charged twice for the loan. Take the current interests for overdraft into consideration; the cost for this consumption credit insurance is much more expensive than overdraft, and more inconvenient. The expensive insurance premium is due to the complexity in managing the risk involved. As the result, the future of this product is still hard to predict.