Insuring A Personal Loan: Here's How It Can Protect Borrowers

Outlook Money

Personal Loan Insurance

It covers loan repayments if a borrower cannot make payments due to death, disability, or loss of employment.

Personal Loans

Coverage

Lenders offer two types of coverage: term insurance and critical illness insurance.

Coverage

Term Plan

Term plan repays in the form of a lump sum to the nominee if the borrower passes away during the tenure of the plan. It also offers critical illness cover.

Term Plan

Disability coverage

It also helps one provide EMIs to borrowers if they are medically incapable of working.

Disability coverage

Unemployment coverage

During the involuntary job loss, this plan can help with repayments for a limited period of time.

Unemployment

Factors Affecting Insurance Premium

1. Loan amount- The loan amount is provided at a higher premium, which attracts the borrowers.

Things To Consider

2. Tenure & Age

If there is a long tenure of loans, it increase costs due to higher risk and over the age of 50, insurance premiums are higher for borrowers.

Tenure & Age

Factors to Consider

Factors to be considered include determining whether the existing health or life insurance offers sufficient coverage.

Factors to Consider

Other Factors

Other factors include considering exclusions from policies, especially for self-employed individuals or those with pre-existing conditions. It also includes the cost of premiums and the impact on loan expenses.

Factors

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