Loan protection insurance is meant to provide financial support incase of sickness and accidents that affects your monthly income. Whether the need is due to disability or unemployment, the monthly loan costs are financed by the insurance company or the bank that offers the service.
How it works
Loan protection insurance pays the monthly debts up to a predetermined amount and it is often a short term protection. The insurance normally covers the monthly loan costs from 12 to 24 months depending on which service you choose. The benefits of the policy can be used to pay off payday loans. personal loans, car loans or credit cards. Normal terms is that you are between 18-65, you are healthy and you have a daily job with income.
Types of loan insurances
This policy disregards the age, occupation and if you are a smoker, woman or a man. You can chose the amount that your insurance should cover, but it will of course also affect the insurance cost. It is common that the banks and credit companies offer this kind of insurance.
The cost of the insurance is determined by your age and the amount that you want insured. The insurance normally covers your loan expenses for a maximum of 1 year. This insurance even covers the loan expenses in case of death, which is a good protection for relatives that might be affected by the debts of their relative.
What Are the Costs?
There is no fixed costs for these kinds of insurances. The price is determined by where you live, your age, your income, debts and how much you want the insurance to cover. It is therefor impossible to even give a hint of the cost. The best thing to do is to contact several insurance companies to compare costs.
Make sure you read all clauses in the contract, so that you know exactly what and when the insurance covers your loan expenses. Also make sure that you qualify for the coverage incase something happens.
Demand that the insurance company or the bank explains the terms and conditions in a way that you understand everything, otherwise you should look for an alternative company.
Choose a well known insurance company or a bank that you trust over new, small and unknown companies, it will always be a safer choice.
It is more important to get a loan protection insurance for mortgage or a personal loan then a small credit such as payday loan or interest free loans, since the small credits are short and with an insurance you can get a loan and insurance cost that is higher then the actual loan.