Nowadays, obtaining a personal loan has become easier for self-employed individuals, salaried employees, and retired pensioners. However, in the case of sudden job loss, temporary disability, or accidental death of the borrower, repaying the personal loan in monthly installments can become difficult. This is where, personal loan protection plans come in handy. Whether it is a home loan or a personal loan, it is advisable to buy a loan insurance plan in order to protect a borrower’s monthly loan payments in the case of unfortunate occurrences. Banks in India offer loan insurance to help borrowers repay their home loans, car loans, and personal loans on time regardless of the individual’s ability to pay.
Some banks extend personal loans with a loan insurance cover, but it is up to the borrower to buy the policy cover or reject it. There are several advantages to buying a loan protection insurance plan such as:
Like any other insurance, a premium amount has to be paid for loan insurance. The premium amount varies from bank to bank. The premium amount may be higher or lower depending on the individual’s age, physical health, loan amount, and loan tenure.
|Loan amount||If the loan amount is high, the premium amount will also be high.|
|Repayment period||If the loan tenure is long, the premium amount will be higher.|
|Age||The premium amount is higher for older individuals.|
|Health||The premium amount will be higher for individuals with poor health.|
There are several important factors to consider while choosing a personal loan insurance plan such as:
As the loan tenure is lower for personal loans, the premium amount for a personal loan insurance plan is also low. With a group insurance policy, the premium amount is reduced further. There are 4 different premium covers available to suit a buyer’s needs:
Some banks offer a free personal accident cover with its personal loans like: