Unfortunate events often tend to be unexpected, so the truth is, no matter how hard you try to prepare for eventualities, you can never really prepare for them enough. After all, there really is no way to completely and fully avoid accidents, injuries, or sickness. The most you can really do is hope for the best and make sure that you and your family are insured in case misfortune does come a-knocking.
The protection you did not know you needed or even wanted.
In these instances, loan protection insurance and other similar products come in handy. In a nutshell, loan protection insurance takes care of the monthly repayments of specific active loans as a form of financial support. This is particularly useful if or when the policyholder suffers injury or trauma, becomes seriously ill, or even dies. Involuntary unemployment may also be covered by some variants of this kind of insurance, as well.
What are your options?
Generally, you can take advantage of any of the two kinds of loan protection insurance. Loan Cover is the first kind, and this variant provides financial assistance by settling your entire outstanding loan balance in the event of serious medical trauma or terminal illness or death.
The second kind of loan protection insurance is known as Loan Repayment Cover. Basically, if you should involuntarily lose your job or somehow suffer a disability, a loan repayment cover will take care of your monthly loan repayments up to a specific period of time. This will usually give you enough time to recover and get back on your feet, at which point you can continue paying off your loan obligations yourself.
What’s in it for you?
When you have loan protection insurance of any variant, there are numerous benefits that you can definitely enjoy. First of all, you will not have to worry about your financial obligations should you meet some sort of misfortune that would drastically change your circumstances, so you can definitely enjoy peace of mind and some sense of financial security.
Second, if you get sick or die, the burden of your debt will not have to be taken up by your family. And if you are the main breadwinner and provide the main source of income, you know how useful and important this would be.
Third, you will not be left scrambling to pay for your past-due obligations once you have recovered because loan protection insurance will keep your monthly repayments updated. Furthermore, because your payments are up to date, your credit score will essentially remain the same, even with a financial crisis in your hands.
Some things to take into serious consideration.
Now, when you get a car, home, or any other kind of loan, some lenders may make it seems like loan protection insurance is absolutely mandatory. They usually push this because it is in their absolute best interest and lessens the financial risk that they are undertaking. What you must know, however, is that it is completely voluntary, and it is important that you are aware of this, so you will not be roped into getting a loan product that you do not need or want. In fact, if you wish, you can even get loan protection insurance from a different provider and even separate from your loan.
The best way to do is to take the time to study the various offerings of different loan providers to find the one that you think is best for you. Know that most loan protection insurance has specific exclusions and clauses, just like all insurance policies. For instance, most policies of this sort will not cover part-time or contractual work, or even if you are self-employed. Some pre-existing medical conditions may also not be covered, as well. It is, therefore, very important to make sure that you qualify for loan protection insurance by reviewing all the terms and clauses of the policy.
You also have the option to choose your loan protection insurance level of coverage. This can either be partial coverage or full coverage, all depending on your regular income stream.
With that said, loan protection insurance is one of those products that you never really think about getting, but actually has more benefits and offers more help in the long run. Knowing that this option is available and accessible for you is already peace of mind in itself.