The structure of the assignment of the fifth does not provide for the presentation of guarantees by the applicant, even if, in reality, it provides them automatically through salary or pension, depending on the category to which it belongs. In fact, the lender bank finds some form of guarantee in the XYZ accrued by the employee and also the pension represents a protection in the payment of installments. In addition to this, however, banks require employees and pensioners applying for the loan to underwrite an insurance policy that protects the amount paid out.
Assignment of the fifth and further guarantees
As already mentioned, even if the banks do not require signatures of guarantors, surety, pledges or mortgages on properties for the transfer of the fifth, they oblige the applicant to the compulsory subscription of an insurance that is to guarantee the sum disbursed and that intervenes in the payment of insolvency of the installments if the applicant is unable to pay. In the event of insolvency of the payment, the insurance company intervenes to comply with the commitment. Insurance is therefore a form of guarantee for the bank or the entity that financed the loan , which ensures coverage of the entire sum paid. The cost of insurance coverage is retained by the lender that will include it in the final sum.
Assignment of the fifth: two policies are compulsory
The sale of the fifth of the salary does not provide for further guarantees but two policies are mandatory: that of life and the risk of employment. The life-threatening policy is mandatory for all, while the other at risk of use is at the discretion of the bank or the financial institution providing the loan. In fact, in the event of a sudden loss of work, the insurance provides for the payment of the installment by directly accessing the accrued XYZ. The bank imposes an obligation on the employee on the severance pay, which prevents him from requesting any advance on the XYZ for the duration of the loan.