Loan insurance is an insurance policy that covers your loan installments if you are unable to pay your loan due to any unfortunately event such as job loss, illness, death etc., then the loan customers will get the benefit of this directly. This is a kind of security cover that protects you and your family from financial stress.
Types of loan insurance
This security cover is available on all loans and all loans are insured by banks and NBFCs so that they can use it to recover their EMI and loan amount from the customer.
1. Personal loan insurance
This feature is available for Personal Loan so that in the case of events such as missed, illness, or death, your loan pays the EMI and protects the pressure of the EMI above your family.
2. Home loan insurance
Whenever you buy a house or get it constructed and take a loan from a bank or NBFC for it and are unable to pay the EMI in case of any emergency or the borrower dies, the insurance pays the outstanding loan amount.
3. Business Loan insurance
Whenever you take a loan from a bank or NBFC to start or promote a business and your business flops or gets completely postponed due to any reason, during this period your loan amount is repaid in the form of EMI with immediate effect by the insurance and you do not face any financial burden.
Why loan insurance is important.
You get financial security. It pays off your loan in case of an unexpected event, thus saving your family from financial stress. It gives you the assurance that you or your family do not have to worry about repaying the loan, and reduces the risk for both the lender and the borrower.
Benefit’s of Loan Insurance
Financial assistance in difficult times It provides financial assistance in case of events like job loss, illness and death, it protects your family from financial crisis. It will save your family from crisis, eliminates the worry of repaying the loan and frees you from paying EMI.
What should be kept in mind while getting insurance.
While taking loan insurance, it is important for you to keep some special things in mind.
Terms and conditions of the policy :
While taking an insurance policy, you must first pay special attention to the terms and condition’s so that your loan can be utilized as soon as you default.
Coverage :
Also confirm whether your loan policy cover’s all type’s of risks or not. If it is covering some specific things then check the loan insurance first.
Calculate premium :
Check the premium amount of your policy so that your premium payment is not too high, so ensure that you are paying the right amount of premium as per your need.
Joint Loan :
If you have taken a joint loan, then make sure whether your joint insurance covers the loan or not. If it does not, then first of all you should discuss with the insurance agent for the joint loan.
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What to do while taking any type of loan
Whenever you are taking any type of loan like home loan, business loan, startup loan, education loan, car loan, etc. then keeping the future in mind, first of all you should choose your insurance policy with the loan so that if any untoward event happens to you, you and your family do not have to face any problem, no one knows what can happen to whom, so while taking a loan, definitely buy an insurance policy.