If you have taken a loan and you are not sure that you will be able to repay all the installments in time then you should consider taking loan insurance because it can protect you if you fail to repay the installments. The insurance can be taken from the same bank or the lender who has approved your loan if the same bank approves it at the lowest price but there is no such compulsion. You can also consider some other bank or lender to apply for the loan insurance if this could reduce your total expense.
The types of Loan Insurance
Before applying for insurance, you should know the types of the loan insurances you could apply for. There are three types of insurances that could protect you from being a defaulter on your loan. These insurances are the death, disability and unemployment insurance. All these types of insurance are made to secure you’re the amount you have taken from the bank and protect you from being a defaulter.
This type of insurance could work in the situation if the person who has taken the loan dies in an accident then a person from the same family can be the next responsible person to repay the loan. The person who will be held responsible for the repayment options will depend on the conditions of the agreement. The loan holder will have to decide at the time of taking the insurance that who will be the next person responsible for the repayment.
If the loan holder gets injured or disabled in an accident or because of some other unexpected medical problems then this coverage will cover the monthly payments of the loan holder. The amount covered by this insurance would depend on the amount as agreed in the agreement.
If the loan holder was employed at the time of taking the loan and was also sure to repay all the installments in time but becomes unemployed due to any reason then his monthly payments will be secured by the insurance he has taken. The amount that will be secured by the insurance would depend on the amount agreed in the insurance agreement. If you have taken a loan, the repayment of which depends on your monthly income then you should also take the unemployment coverage because no one knows what will happen tomorrow.
These insurances may increase your expense but will also secure your loan and security is necessary and important to fight against all the unwanted situations such as death, disability or unemployment. If you have covered your loan by a suitable insurance scheme then you or your responsible family members will get more time to repay all the installments if the unwanted situations happen. The loan insurance would not only give you more time to manage the balance payment but will also protect your credit score and thus it will always be easier for you to apply for the next loan when needed.