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Loan Protection Insurance

If you want to know if loan protection is right for you, you first need to visit and understand what loan protection insurance is all about. Most of us, if not all of us have an existing loan with a certain financial institution. The loans help out a lot, but when it comes to paying, some of us hit a rough patch and end up defaulting on loans. Defaulting definitely puts one on the wrong side of the law. Therefore to avoid being labeled as a defaulter, insurance companies offer loan protection insurance, which covers loan payment during difficult times. It protects loanees from default. Finding a loan protection policy is, however, not an easy task. If you are not careful, you might end up deeper into debt.

How does it work?

Loan protection insurance helps the insured person pay monthly debts up to an amount agreed on before signing the policy. Depending on the insurance company, the policies provide short term protection that ranges between 12 to 24 months. The policies cover several types of loans, including personal loans, credit card debts, mortgage, or car loans.

Loan protection insurance is only available to adults aged between 18-65 years. To qualify for the policy, the coverage should be purchased when the person is in employment or self-employed and working for more than 16 hours a week.

Types of loan protection insurance policies

Age-related policy: this is a type of loan protection policy that is determined by the age of the policyholder and how much coverage he or she wants. The coverage last for only one year. The cost of this type of policy is more expensive for older policyholders since they tend to make many claims. The age-related policy is exclusively offered in Britain.

Standard policy: this is a more open loan protection policy with fewer restrictions. It does not consider the gender, age, occupation, or poor health habits of the policyholder. The insured also has full permission to decide how much the coverage will cost. This policy has a 60-day exclusion period before payment can be released. The Standard policy covers loans for a maximum of 2 years. This type of policy is available in many loan providing institutions.

What is the cost of loan protection insurance?

The cost of a loan coverage depends on several factors: location, the type of policy you purchase, and the amount of coverage you want. Your credit history also determines how much the policy will cost. You will pay more if your credit history is poor. It might help to look for a discount insurance group before purchasing a policy. You should research thoroughly before buying any policy. The research will help you to buy a policy that suits your needs and budget.

To fully know if a loan protection policy is right for you, you need to do thorough research to understand the best policy for you and the best insurance company. Afterward, you should read all the terms and conditions of the policy and the exclusions of that particular policy before buying it. If you do this, then you will be 99.9% sure whether a loan protection policy is your cup of tea or not.

Post Author: Eleanor Horton

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