This is the question that you should ask yourself if you have loan repayments that you have to maintain each month. If you have secured loan repayments then essentially your home is at risk if you should fall behind on your repayments and could not catch up. You could also be taken to court if you fall behind on unsecured loan repayments. While in work not being able to maintain your repayments could be the last thing on your mind. However at anytime you could be unlucky enough to become a victim to unemployment or incapacity and lose the income you rely on. If you have loan cover behind you there would be a monthly tax free income from the policy towards your repayments.
When your loan cover would pay out would depend on the provider. You might be able to begin claiming after day 30, with others it could be 60 days and with some it might even be 90 days before you would get an income. As the terms differ so much it would be essential to check the terms of any policy you were considering before taking it out. The same could apply as to how long you would receive your benefit. Some providers could give you a tax free income for 12 months and with other providers it might be 24 months before your policy would cease. The amount of income you would get from your policy would depend on how much you chose to protect when you took out the policy. The provider would limit this so they would have to agree to the amount you chose to protect.
You might choose to take out loan payment protection to maintain your repayments in the event that you became either incapacitated or unemployed and claim for either event. You could also choose just to take a policy that would provide you with an income if you became unemployed. You could also just choose to take cover for redundancy alone if you wanted. The events chosen to protect would go towards how much you would have to pay in premiums. If you have chosen a generous provider then you could get carer cover in the policy. This would allow you to make a claim on the cover in the event that you had to stop working to take care of a family member.
Finally check the terms of your loan cover before taking it out to ensure that you would be eligible to claim on the policy. There will always be some exclusions with some providers adding in more than others. Checking them against your lifestyle is the only way to ensure that you could make a claim.
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