As part of the payment protection insurance family, loan insurance is designed to provide short-term financial help in cases of accident, sickness or involuntary unemployment. If you prefer, you can approach your provider for cover on only one or two of these events.
The policy provides you with a monthly tax free cash benefit that can be used to maintain your monthly loan payments. If there is any extra cash, you can use this for any other reason you like. The payment will usually last for 12 or 24 months depending on the provider you choose.
To apply for cover you will need to meet the eligibility criteria of the provider. Normally the provider will require that you have at least six months full time employment, UK residency status and you must be at lease 18 years.
Once the policy is in force you will be able to make a claim after the specified deferment period. The typical period after the covered event is 30 – 90 days, but again this is dependent on the provider you choose.
In terms of the benefit amount, the provider will not cover your entire salary. You can be covered for up to 50% of your gross salaried income or there are maximum amounts of £1,500.00.
When taking out your policy it is important to familiarise yourself with the terms and conditions as loan insurance policies usually carry exclusions that could prevent you from making a claim. Exclusions could relate to existing medical conditions or the industry within which you work.
Taking out loan payment protection insurance can be the only way to provide you with peace of mind and the financial benefit you need to maintain loan payments. Depending on your circumstances, you may not qualify for state benefits as the demand for this limited resource continues to grow. By taking out your own protection you will be sure to have the help you need when you need it most.
To obtain the best deal on your policy you might want to evaluate what independent providers have to offer. Thanks to the huge discounts they offer, their premiums tend to be much lower than that of high street providers. With this in mind, it is worth exploring this avenue to see how much you can save.
Loan insurance is beneficial to anyone concerned about how redundancy, an accident or illness will affect their earned income. If your income was to reduce or disappear, the insurance will be there to provider the relief you need. This will prevent nasty red letters and prevent your from ruining your credit history.
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