When you go to a bank or a financial institution to apply for a loan, it is certain that you will get a loan payment insurance.This policy protects you from repaying the loan if anything unnatural happens.You can get loan protection insurance against a mortgage, a bank loan, or any other type of credit.
Loan payment insurance is very beneficial for a person who is taking a loan and this is the reason thousands of policies are sold every year.
Why Go For Loan Insurance Policy
The most important reason for buying these type of policies is “peace of mind”. If you are taking a loan of higher amount, only the thought that you will not be able to repay the loan will become a nightmare for you.It could mean an adverse credit or at worst losing your home. Thus, with the help of loan protection insurance, you don’t have to worry about the repayment of loan.
Most of us feel that we are wise in handling practical matters and exercising good judgment .All of us think that we have taken every possible precaution if things go wrong. If you didn’t take loan protection insurance, you might feel guilty of not being able to protect yourself and your family.
Therefore, it would be a good idea of taking out a loan protection insurance. It would be a highly stressful situation if you find yourself unable to work because of an accident or for any other reason.It would greatly reduce your stress if you knew that the payment of your loan could continue.
Downsides ofthe loan payment insurance
However, you need to consider some of the downsides related to the loan payment insurance before you decide.
- A loan payment insurance policy is the same for every type of loan. It wouldn’t be altered according to your situation. Thus, it might not fulfill your requirements.
- A loan payment insurance policy protects against particular set of conditions. If you think that a policy will protect you against whatever happens then you could be in a shock. For example, the policy would cover you against illness but at the same time, there would be a set of conditions which are not covered, including the ones which are very common.
- The value of the policy would significantly increase the cost of the loan. You would pay out more every month without getting any benefit.
You can use loan protection insurance for various types of loans, for example, home loan, car loan, personal loan or any other type of financial loan. You should be very careful while choosing a loan protection insurance because there are a number of choices available in the market and you should choose a policy that is suitable according to your needs. However it is not at all necessary to buy the loan protection insurance from the same place from where you have taken the loan.
However, it is important to remember the time frame provided by the various policies. In case you are ill or get injured, the loan protection policy will pay for you the monthly payment of your dues for a particular time period only. This time frame should be decided at the time of signing the documents of the policy. You should always decide about this time period according to your requirements. Some of them make the payments for twelve months and some for twenty four months, as the case may be.
Another essential thing to be kept in mind is the waiting periods before the commencement of the payments. Some companies have a waiting period of 30 days while some have for 60-90 days from the time of your accident or illness.
Therefore, it is very important to go through all the rules and details related of the loan protection insurance policy like its coverage, monthly payment limit , so that u don’t face a nasty situation in the future.