Issuing a credit-life or asset insurance policy
Where a product bundles insurance, a policy is issued against the loan it protects — credit-life covering the borrower's balance, or asset insurance covering the collateral. Two things make Ustawi's handling correct where many loan books quietly go wrong: the sum-insured decreases in step with the loan, and the premium is posted as a general-ledger liability the moment it is collected, never as income.
Issuing the policy
The policy is tied to the specific loan it protects, typically at origination. Credit-life covers the outstanding balance so the loan is settled if the borrower dies; asset insurance (collateral cover) protects the pledged asset. Where a product requires credit-life coverage, an active policy is one of the disbursement gates — the loan cannot disburse until the cover is in force, so the balance is protected from day one.
The premium is a liability, not revenue
A premium collected from a borrower is not the lender's money — it is held on behalf of an insurer, an amount the business still owes. Booked as income, it would inflate profit, distort the tax position, and leave nothing set aside when a claim lands. Ustawi posts the premium as a GL liability from the moment it is collected, so the books reflect what the premium actually is.
- Policy linked to the loan it protects, issued at origination.
- Credit-life (borrower balance) or asset insurance (collateral) depending on the product.
- Sum-insured that steps down with the declining loan balance, so cover matches exposure.
- Premium posted as a GL liability, never as income — no re-keying into the ledger.
For products that bundle credit-life, the active policy is checked at disbursement alongside collateral perfection. An approved loan will not release cash until its required cover is live.