You probably heard about loan insurance before but never seriously considered taking out a policy. In this article we will show you the benefits of the products, who and what it is designed to cover and where you get one. After reading this, you can then decide if taking out a policy will be right for you.
The policy is designed to provide a financial benefit if you were to lose all or part of your income. Three main types of cover exist and they are involuntary unemployment, sickness or accident. Policies are available with all three elements or you can apply for just one or two of the mentioned events. Depending on the combination you choose, the premiums will be adjusted accordingly.
To apply for loan insurance you many need to provide at least six months employment history. In addition to this you will need to meet the entry requirements as set out by the provider.
Some of these rules relate to your age, UK status, number of hours worked each week etc. Once you meet the criteria you can have your policy up and running.
Before making a claim you will need to wait out the deferment period as stated by the provider, but the typical period is 30 – 90 days. Once the income is paid, you can expect this to last for 12 or 24 months depending on the provider you choose.
One thing to note is that loan insurance policies have exclusions that could prevent you from making a successful claim. Rather than finding out the hard way, make sure you know what these exclusions are before you sign up and see how they fit in with your circumstances.
The next point to be aware of is the maximum benefit levels imposed by providers. When you begin to claim on your policy, don’t expect the income to match what you were earning in employment. The provider will only pay a maximum percentage of your salaried income so make sure that figure is enough to cover your loan instalment.
When it comes to purchasing your insurance there are many providers on the market. If you want to obtain the best premiums however, it might be worth exploring the independent provider as the costs of their premiums are normally much lower than high street companies.
Conclusion
Hopefully you should have enough information to decide whether or not you want to explore loan insurance further. The product is great as it provides the financial help you need when you’ve suffered a blow to your employed income. Not only that, it provides you with peace of mind because thanks to the income you won’t have to worry about the bills while you recover or seek alternative employment.
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