Loan protection insurance could help you to keep your repayments straight in the event you lost your income. A loss of income could come through unemployment or as the result of becoming incapacitated. If you had to manage without an income you could have a struggle on your hands to find the income to meet your repayments each month. With a policy behind you it would provide a substantial sum towards you being able to make your repayments.
When you take out a policy you need to work out how much you want to protect as this would be the income you would claim should the need arise. There would be a limit on this amount and your provider would have to agree to your chosen sum. This income which would be tax free would be paid out after the deferment period. This could be 30 days with some providers and with others it might be up to the 90th day. Some might offer to date back your benefit to the first day that you suffered one of the events so always check the terms on offer. You might then be able to enjoy up to 12 months of benefit from the policy, should you need it, or with others the benefit might continue for up to 24 months.
When applying for loan protection insurance you would have to decide on what events you wanted to cover. A policy might be taken out that would allow you to claim if you should suffer from either event. You could just decide that you only want to cover the possibility of losing your income to redundancy alone. Alternatively you could choose just to protect against incapacity alone if this suited your needs more. Your provider could have given you the additional benefit of carer cover in your policy. Carer cover would allow a claim to be made on your loan cover if you were to have to give up work and care for a family member.
Your protection could be a better form of security then savings of trying to claim an income from the State. The money you might be entitled to get from your policy might not come anywhere near the income you brought home from your job. This again could mean a struggle to find your loan repayments.
Any loan protection insurance policy would come with some exclusions and these would need to be checked against your circumstances. There could be just the most basic exclusions while other providers might include many. For instance generally you would have to be in a full time position and have been so for a certain period of time before applying for your policy. You would usually have to live in the United Kingdom, Channel Isles or the Isle of Man in order to be eligible to take out a policy.
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