There are many benefits to taking out loan insurance with of course the main one being that the policy would provide you with an income if you became involuntarily redundant or incapacitated. If you lost your income and had secured loan repayments to maintain you could end up losing your home if you fall behind and are unable to catch up. Unsecured loan debts could see you being taken to court and this could mean you would lose your belongings to bailiffs. With a policy behind you the chances of failing to service your repayments are lessened.
If you want to take out a loan insurance policy you can choose to take it with a standalone provider and this is generally one of the best ways to make savings on a policy. Cover taken with the lender on the high street is generally more expensive. To take a policy you first have to agree to cover a sum of your loan repayment with the provider.
This is your income, tax free, should a claim have to be made on the policy. You might be eligible to make a claim on your policy if you become a victim after 30 days. With other providers you could be entitled to claim an income after the 60th day and with others it might even be as long as the 90th day before you could claim. Some will date back your income to the very first day of incapacity or unemployment but 90 days can be a long time to wait for any income. You could already have fallen into debt by this time. You might be able to continue claiming your income for up to 12 months if you should have to claim for this length of time. With other providers it could be up to 24 months of benefit from the policy. You therefore need to check before you take on your policy.
While you can take out your loan insurance policy to protect against redundancy and incapacity you might want to tailor your cover to suit your needs. You could therefore just choose to protect against unemployment alone or you might just want to take protection against incapacity alone. Your provider might also offer carer cover in with the policy and this allows a claim to be made if you have to give up working full time to take care of a family member who is incapacitated. Providing you have checked the small print of any policy you are considering you would have a viable back up plan to fall back onto if you were to become a victim to one of the events you chose to protect against.
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