Is the letter of guarantee an insurance policy?

Don't! Letter of guarantee provides a risk transfer mechanism involving three parties, that is, a three-party contract in which the guarantor (insurance company) provides guarantee for the debtor (principal) and the creditor (beneficiary), which is similar to bank guarantee. Therefore, letter of guarantee is essentially different from traditional insurance products. Insurance is a product that provides risk avoidance or protection and prevents the possible negative impact of accidents. On the other hand, guarantee is a product purchased at the request of a third party in order to protect the interests of the third party. A letter of guarantee guarantees that a customer (such as a contractor) can meet the requirements of one or a series of projects not only financially but also in management and operation.

(1) A bank guarantee, also known as a bank guarantee, is a written commitment issued by a bank at the request of a customer. If the applicant fails to perform the debt or agreed obligations according to the contract signed with the beneficiary, the bank will perform the guarantee responsibility. There are several points to note here: the nature of bank guarantee is guarantee, that is, guarantee contract. Bank guarantee is a kind of guarantee certificate that the bank undertakes the payment responsibility as the guarantor, and it is usually the absolute responsibility of the bank. If the guarantor breaches the contract, the bank, as the guarantor, can directly exercise the corresponding rights, but has no right to recover from the payer.

② Guarantee conditions of the issuing bank: the applicant fills in the application form and signs the guarantee. Submit the background information of the guarantee, including the contract, approval documents of relevant departments, etc. Provide the relevant letter of guarantee format and affix the official seal. Provide the latest financial statements and other relevant documents. Guarantees accepted by banks, including deposits, pledges, mortgages or third-party credit guarantees. The bank will review the applicant's credit standing, performance ability, project feasibility, guarantee terms and guarantee, pledge or mortgage. Payment of guarantee fee: 5‰ of the amount of guarantee is charged at one time for each transaction, with a minimum of 100 yuan, and a guarantee can be issued to the outside world. Materials to be submitted for the letter of guarantee: valid business license, legal representative's ID card, organization code certificate, tax registration certificate, original project contract or purchase and sale contract and a copy stamped with the company's official seal.