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INSS Orders Suspension of Embedded Insurance on Payroll Loans and Requires Refund to Beneficiaries.
The INSS has determined that financial institutions must stop charging credit insurance within payroll loan contracts and refund retirees and pensioners for amounts incorrectly deducted directly from their social security benefits, following an administrative process that proves the undue charge and ensures the right to defense.
According to the Folha de S. Paulo portal, the INSS measure affects banks and financial institutions that have been linking insurance to payroll loans without clear authorization from beneficiaries and conditioning the loan approval on the payment for financial protection, which is prohibited in transactions with automatic payroll deductions by the agency. With the new commitment term, the institutions will be able to operate payroll loans again, but without including insurance, packages, or products under different names.
What the INSS Decided About Payroll Loans
The INSS has signed a commitment term with Banco Inter, Facta Financeira, and Cobuccio Sociedade de Crédito Direto to immediately suspend the charge for credit insurance linked to payroll loans for retirees and pensioners.
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This decision came after an investigation into irregularities and after the agency had already blocked new operations from these institutions in October 2025.
The INSS’s determination affects not only new contracts but also refinancings that had been used to embed additional charges.
Under the term, these institutions are prohibited from offering or including insurance in transactions where payment is made through direct deduction from social security benefits. The INSS payroll loan must be transparent, with known rates and amounts, without hidden products.
What Is Credit Insurance and Why Was It Targeted by the INSS
Credit insurance, also referred to as financial protection, is a product that pays off or covers the outstanding balance of a loan in the event of death, disability, or other situations defined in the policy. In the private market, it can be regular, but in the INSS payroll loan, it cannot be imposed as a condition, nor charged in a disguised manner within the installment.
The problem identified by the INSS was precisely this automatic link. Senior citizens and pensioners were led to believe that insurance was mandatory to release credit, which makes the installment more expensive and reduces the net amount received. Since the payment occurs directly from the benefit, the insured often only notices the additional deduction later, when the charge is already being processed monthly.
Refund of Amounts Incorrectly Deducted
The term signed with the INSS provides that amounts charged improperly will be refunded to retirees and pensioners, provided that the irregularity is confirmed in an administrative process.
This means that there will be case-by-case analysis, with the right to contradictory and broad defense, to ensure that there are no undue refunds or legal harms to the parties involved.
The refund may occur through reversal, credit on bills, or direct adjustment to the benefit, depending on how the charge was made by the institution.
The key point is that the INSS acknowledges that there was a charge for insurance not clearly agreed upon and obligates reimbursement to the insured. This model had already been used days earlier in another agreement with an institution that refunded amounts to beneficiaries.
Relation to Previous INSS Suspensions
On October 15, 2025, the INSS had already suspended new payroll operations with these institutions due to investigations conducted with other federal government agencies. At the time, the agency stated that the measure was necessary to stop irregularities and protect the elderly until the definitive conclusion of the processes.
With the current agreement, the INSS signals that those who comply with the new rules will be able to operate again.
At the same time, the social security agency informed that it will continue to evaluate the behavior of other financial institutions that operate in payroll loans.
This means that the case does not end here and that the INSS is using the commitment term as a way to regulate the market without needing to completely remove banks from the payroll loan system.
Other Banks Have Been Targeted
The movement of the INSS is not isolated. In a recent agreement, the agency also made Banco BMG commit to refunding more than 7 million reais charged improperly from about 100,000 beneficiaries.
In this case, the restitution was set to occur through discounts on customer bills, with the refunded amount identified in the next charge.
Despite this, not all institutions that signed the term were immediately allowed to resume payroll operations. The release depends on the signing of additional instruments and full compliance with the conditions imposed by the INSS.
In practice, the agency is conditioning access to the payroll credit market on compliance with rules regarding the protection of retirees.
Why the INSS Is Tightening Control
Payroll credit is one of the main forms of indebtedness for retirees and pensioners because it offers lower interest rates and direct deductions from benefits. Any hidden additional costs directly affect the monthly income of the insured, who often lives on a limited budget. By intervening, the INSS fulfills its role of preventing social security benefits from being used as collateral to sell unauthorized products.
Moreover, there is a component of financial education and transparency. The insured needs to know exactly how much they are paying for the loan and for how long.
When insurance is included without the elder’s knowledge, this transparency is broken, opening the door to abusive practices. That is why the agency reinforced that new offers cannot use other names to disguise the same product.
The INSS’s decision to prohibit hidden insurance in payroll loans and require the refund of amounts shows that the agency is willing to protect retirees’ income and hold banks and financial institutions accountable for violating the rules. It is a measure that can resonate throughout the market, as other institutions are reviewing their practices even without an open investigation.
Do you think the INSS should expand this oversight to all payroll contracts and publish a list of banks that committed irregularities? Let us know in the comments if you or someone in your family has ever had an unrecognized deduction from the benefit.
Sem dúvida, o INSS deveria fazer isso para todos os empréstimos consignados e publicar para que haja transparência.