What is personal loan insurance?
If you have an accident, go through an unpleasant situation or have lost your job and are unable to pay EMI, then loan insurance can help you in repaying your debt. Loan insurance is purchased at the time of taking the loan. For this, the customer has to pay a lump sum at a time or he can pay the monthly EMI.
The applicant gets the loan amount only after the insurance amount is deducted. Loan insurance is taken because if any unpleasant situation comes, the family members can talk to the insurance company and eliminate the loan amount from the bank. This will save the borrower’s family from the burden of filling the EMI of the loan.
What are the benefits of personal loan insurance?
When we go through a difficult period of life, loan insurance helps in dealing with the EMI of the outstanding loan. Personal loan insurance helps
– If you lose your job.
– In death, disability and critical illness
– Many banks also offer money back in personal loan insurance policy, which is available to the customer at the end of the plan.
– Some loan insurance policies also provide income tax exemption under 80C.
If an accident happens, the family members are saved from paying the debt. It acts as a shield for the dependents of the customer.
You take joint loan insurance with your partner. It saves you and your partner in times of crisis. You are sure about this thing that if tomorrow. If anything happens, the loan payments will not be affected.
Before taking loan insurance, keep these things in mind: While taking loan insurance, be very cautious and review it thoroughly.
Does personal loan insurance cover death by accident or death due to any reason? Will permanent disability be considered or will temporary disability be preferred?
– See whether the premium has to be paid at one time or as monthly instalment.
– Will medical checkup be done before taking insurance.
– Check the eligibility of the insurance policy. Is it available on any amount or on a fixed amount.
– In some cases, if the loan is transferred to another bank then the loan insurance ends. See if there is a loan shift in another bank, will it have to be renewed.
– Some banks offer joint insurance policies for both parties.
What do you have to pay to get a loan insurance policy?
Like any other insurance plan, the loan insurance premium will also have to be paid. The amount of premium, age, health, loan amount and duration of the applicant may vary from lender. There are only a few banks that offer insurance without premium.
– Premiums are also higher on more loan amount. In such a situation, the bank also has more liability.
– Due to the age of human, the premium may be less. Premiums are also higher for older people.
– Depending on the term of the loan, the repayment period may also be less. Premiums are also higher for longer periods.
– For people who are in good health, the premium will be lower than those with diseases.
Different types of insurance policies
Unlike home loans, the premium amount and duration for insurance cover is less.
– Single and Regular Premium Reducing Cover: In this case as the amount of the outstanding loan decreases, the premium amount also decreases.
– Single and Regular Premium Level Cover: If the outstanding loan amount decreases then the premium amount remains the same.
Consider these factors for a personal loan insurance policy:
Compare the features of insurance offers
Different banks offer personal loans with different benefits and features. Premium rates are also different from different companies. Therefore, it is important to compare all options before buying an insurance policy. Some companies do not cover loss of job in the policy. If you think that this can happen in future, then you should look at other options.
Understand the terms and conditions
Read the terms and conditions written in the policy carefully, so that there is no problem at the last moment. This will help you to avoid situations where you will not be able to claim insurance cover.
Plan your expenses
Since the cost of the insurance policy will be added to the instalments itself, you will have to plan your expenses accordingly. By making some changes in lifestyle, you can avoid burden on pocket. If you have made a plan to take a loan, then due to unpleasant situations, you should not let the burden of debt fall on your dependents. So taking loan insurance is a wise move.
Do an in-depth research before taking an insurance policy
Often, banks tell about insurance cover in the end, which costs you extra and you are not able to do homework. In many cases, if you want to close the loan before the fixed period, then the benefits of insurance also end with it. Therefore, it is advisable to find out whether you will get refund of premium payment or it will end.