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Important Features of Loan Protection Insurance
Article Summary:Loan protection insurance is a lesser know term. Learn how you can protect all your loans with a term insurance...
Loan protection insurance is not a common name that people hear. We always hear of various kinds of loans, but never seem to hear about the loan protection insurance. This is one of the most important insurances that a person needs to have if the person is deep in loan. This is because if there is a risk to the life of the person who has taken a loan, then the person will not be able to pay the money back and the burden of the repayment will fall on the people who are dependent on the individual.
Many people may have taken a housing loan and also a car loan among other loans. The person could also have a credit card loan. In this situation all the people who have provided the loans will ask the dependants to pay back the amount that is owed to the company. This is a pathetic situation for the family as they would have lost the main earning person in the family and on top of that, the family will also need to shell out all the money that has to be repaid. This makes it very important that any person who has a lot of debt to have a loan protection insurance too.
Features of the loan protection insurance are as follows:
1. Insurance of the loan:
The loan that has been taken out by the person gets an insurance cover. This means that the person who has taken the loan will be able to live peacefully in the idea that even if the person becomes disabled or dies, the family will not be left with the burden of repaying all the amount that the person has borrowed.
2. Duration of insurance:
This is very similar to the term insurance. The person has to pay for the insurance and once the amount has been paid, the individual needs to make sure that the amount is repaid the next year. This is a yearly coverage and the amount of money that has to be paid by the individual will change over the year because there will be a repayment of the loan. This helps the person to have to pay lesser than the previous year unless more money is borrowed.
3. Risk cover:
The risk cover of the loan protection insurance is not only available for the death of the individual who is applying for the loan, but it is also available for the disability of the person in case of any accidents of other problems. Though this is not covering the temporary disability, the person who is permanently disabled will usually suffer from these kind of problems. So the risk cover is a very beneficial aspect for the person who is seeking this kind of insurance.
4. Combination cover:
The individual who would like to have a risk cover for the various loans can also combine this cover with the life cover and this gives a double benefit for the person who is in this situation. This is not a policy that is available with a lot of the insurance companies, but it does help the people who have many loans and think that they could be at risk.
Any person can benefit from this insurance which does not need a heavy insurance premium payment, but is usually less and depends on the amount of loan taken.
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