The borrower on a loan or credit card with credit life insurance died or became disabled: who notifies, and what can the heirs do?

What desgravamen covers and why it matters to the family

Desgravamen is credit life insurance tied to a loan or a credit card. Its minimum content is set by the Fifth Final Complementary Provision of the Insurance Market Conduct Regulation (Res. SBS 4143-2019):

“El seguro de desgravamen, indistintamente si es o no condición para contratar, debe considerar las coberturas de fallecimiento e invalidez total y permanente.”

(Desgravamen insurance, whether or not it is a condition of the loan, must cover death and total and permanent disability.)

If the borrower dies or becomes totally and permanently disabled, the insurer pays the bank. But that does not happen by itself: someone has to give notice and file a claim. This page is about that moment. Choosing or endorsing your own policy, how it is priced and premium refunds are covered in credit life insurance, endorsement and refinancing.

The bank usually sold the policy

When a bank offers an insurer’s policy, it acts as the insurer’s seller (comercializador). This is called bancaseguros. Article 18 of the Insurance Products Marketing Regulation (Res. SBS 1121-2017) describes it:

“A través de la bancaseguros, las empresas pueden promover, ofrecer y comercializar sus productos por intermedio de las empresas del sistema financiero, utilizando su red de oficinas para el contacto con los clientes y para la distribución de sus productos”

(Through bancassurance, insurers may promote, offer and sell their products through financial institutions, using the branch network to reach customers and distribute products.)

In that regulation, “las empresas” means the insurers. This has two practical effects.

Telling the bank counts as telling the insurer. Article 16, letter a):

“a) Las comunicaciones cursadas por los contratantes, asegurados o beneficiarios al comercializador, sobre aspectos relacionados con el seguro contratado, tienen los mismos efectos que si hubieran sido presentadas a la empresa. En este sentido, se entienden que dichas comunicaciones son recibidas en la misma fecha por la empresa.”

(Communications from policyholders, insureds or beneficiaries to the seller about the policy have the same effect as if sent to the insurer, and count as received by the insurer on the same date.)

If the bank learns of the death, it must notify the insurer immediately. Same article, letter d):

“En los casos de seguros con cobertura de fallecimiento, el comercializador debe cursar aviso inmediato a la empresa, en los casos que tome conocimiento del fallecimiento del asegurado.”

(For insurance covering death, the seller must notify the insurer immediately whenever it learns that the insured has died.)

So the family’s first step is to tell the bank about the death in writing and keep the stamped copy. From then on the bank knows, and the rule requires it to notify the insurer at once.

If the borrower had endorsed their own policy instead of the bank’s, the bank is not that policy’s seller. In that case, notify that policy’s insurer directly.

The deadline to give notice, and what happens if you are late

The Claims Handling and Payment Regulation (Res. SBS 3202-2013) sets deadlines by type of insurance. It defines personal insurance this way:

“k. Seguros personales: Son aquellos que dan cobertura a la vida, la integridad psicofísica o la salud del asegurado”

(Personal insurance covers the life, physical and mental integrity or health of the insured.)

Desgravamen covers the borrower’s death and disability, so we read it as personal insurance. For that type, article 3 says:

“Cuando se trate de seguros personales, el siniestro será comunicado a las empresas dentro de los siete (7) días siguientes a la fecha en que se tenga conocimiento de la ocurrencia o del beneficio, según corresponda, salvo que la póliza de seguro correspondiente contemple un plazo mayor.”

(For personal insurance, the event must be reported to the insurer within seven days of learning of it, unless the policy allows longer.)

Seven days is short when a family is grieving. That is why the next rule matters:

“El incumplimiento de los plazos antes señalados por el asegurado o el beneficiario, no constituyen causal del rechazo del siniestro, pero las empresas podrán reducir la indemnización hasta la concurrencia del perjuicio ocasionado cuando se haya afectado la posibilidad de verificar o determinar las circunstancias del siniestro por parte de las empresas y/o los ajustadores de siniestros”

(Missing these deadlines is not grounds for denying the claim, but the insurer may reduce the payout to the extent of the harm caused, when the delay affected its ability to check the circumstances.)

Late notice does not forfeit the insurance. At most, the insurer may pay less if the delay kept it from checking what happened.

The claim request

Giving notice is not the same as asking for payment. That takes a claim request (solicitud de cobertura). Article 4 of the same regulation:

“El asegurado o el beneficiario, según corresponda, debe presentar la solicitud de cobertura a la empresa, incluyendo la documentación e información completa señalada en la póliza de seguro para el proceso de liquidación del siniestro […] La solicitud de cobertura presentada al comercializador del seguro tiene los mismos efectos como si hubiera sido presentada a la empresa, siendo ésta responsable por los errores u omisiones derivados de la comercialización de seguros, en que incurra el comercializador, y por los perjuicios que se pueda ocasionar a los asegurados o beneficiarios.”

(The insured or the beneficiary must file the claim request with the insurer, with the complete documents the policy lists. A request filed with the seller has the same effect as one filed with the insurer, and the insurer is liable for the seller’s errors or omissions.)

Two points. The documents are whatever the policy lists. And you can file with the bank that sold the policy: if the bank makes a mistake or loses it, the insurer answers for that.

The rule speaks of “the insured or the beneficiary”. In a disability case, the insured is alive and files the request. In a death, the regulation does not say expressly who must file; under article 20 of the marketing regulation, quoted below, the desgravamen payout goes to the bank. In practice, tell the bank and ask it in writing to trigger the insurance.

The insurer also has duties to guide you. Article 28 of the Insurance Market Conduct Regulation says:

“Las empresas deben garantizar que los usuarios accedan a información simple, completa y oportuna sobre los procedimientos de solicitud de cobertura de los productos de seguros que ofrecen, antes y durante la gestión del siniestro. […] Las empresas deben contar con canales de orientación a disposición de los usuarios, que permitan dar una información personalizada al usuario – cómo mínimo - respecto de los plazos de aviso del siniestro, lugares para solicitar la cobertura, y la documentación requerida para gestionar la cobertura […] Las empresas deben facilitar, por medios físicos o electrónicos, que los usuarios puedan hacer seguimiento a su solicitud de cobertura, hasta el envío y/o puesta a disposición de la respuesta.”

(Insurers must give users simple, complete and timely information on how to claim, before and during the claim; must have help channels that give personal guidance at least on notice deadlines, where to file and which documents are needed; and must let users track their claim, physically or online, until the answer is sent.)

You can call the insurer, ask which documents are missing, and then track the claim.

Heirs can find out whether the insurance paid

Heirs are not the insured and almost never the beneficiary of desgravamen. Even so, they have an interest in the insurer paying, because that closes the debt. Article 20, letter c), of the marketing regulation protects them:

“c) En el caso de los seguros de desgravamen, las empresas deben comunicar a aquellas personas con interés en el pago de la indemnización (aunque no tengan la calidad de asegurados ni de beneficiarios del seguro), en caso les sea requerido, acerca de los pagos de indemnizaciones efectuados a favor de empresas del sistema financiero, o en su defecto, los rechazos de siniestros. Asimismo, los rechazos de siniestros deben ser comunicados a las empresas del sistema financiero.”

(For desgravamen, insurers must tell people with an interest in the payout, even if they are not insureds or beneficiaries, when asked, whether they paid the bank or denied the claim. Denials must also be sent to the bank.)

If the bank keeps charging and will not explain why, ask the insurer in writing whether it paid the bank or denied the claim. The rule says “when asked”: you have to request it.

When the debt must be closed

If the insurer paid, article 27(2) of the Financial System Market Conduct Regulation (Res. SBS 3274-2017) sets the bank’s deadline:

“La fecha de pago de indemnizaciones a las empresas es la que debe considerarse para realizar la liquidación de la operación activa. Las empresas tienen un plazo máximo de treinta (30) días de recibida la indemnización para efectuar la liquidación.”

(The date the payout reaches the bank is the date used to settle the loan. The bank has at most thirty days from receiving the payout to settle it.)

The debt is settled as of the date the bank received the payout, and the bank has thirty days from receipt to do it. If the insurer confirms it paid and the bank keeps charging after that period, file a complaint with the bank.

In the norms we read, there is no express rule stopping the bank from charging while the insurer assesses the claim. If the family pays installments in the meantime and the insurance later covers the debt, ask the bank in writing to refund what was paid.

If the claim is denied, or debt remains

Under article 20, quoted above, the insurer must also send the denial to the bank. How to challenge a denial and the insurer’s deadlines to answer are covered in insurance claim denied.

If debt remains, how much can be collected from the heirs is explained in do you inherit debt?. What the bank can do with the deceased person’s accounts before heirs are declared is in a deceased person’s bank accounts.

What this page does not cover

We did not review specific policies or their exclusions, or which documents each insurer asks for. We do not cover life insurance that is not tied to a loan, card protection insurance against theft or fraud, or Ley 29946 (Insurance Contract Law). In the norms we read we found no rule on whether the bank may charge the heirs while the claim is pending. We did not review decisions by Indecopi, the SBS or the Defensoría del Asegurado on desgravamen.