Loan Protection insurance is such a policy that will take up the task of making payment for you, every month, if you are rendered powerless to work and thus, unable to pay off your debts of a certain loan, due to certain unforeseen set of situations and consequences. These circumstances may include illness, unemployment or an accident that has resulted in a temporary disability.
Before going on to take loan protection insurance, you must first consider a few important things to judge whether it is actually suitable for you. There are two necessary things which you need to understand about loan protection insurance. First of all, you need to get a thorough and in depth knowledge of the mechanism of its working. Secondly, you also need to know the exact expenditure involved in this type of coverage. You should keep it in mind that, in order to make use of loan protection insurance, you are required to be employed for a period of at least six months.
There are different varieties of loans for which you can use loan protection insurance. These include personal loans, car loans, credit cards, or any other kind of financial loans. You should however, make a good research before to purchase a loan protection insurance, because there are various choices available for this in the market and you should always opt for the price that suits your needs best. It is however, not necessary, though available, that you have to purchase the loan protection insurance from the same venue from where you have got your loan. You can always purchase it from any other trusted financial provider, as a policy distinct from your loan.
The time frame provided by the different policies must be kept in mind. The monthly payment for your loan dues will be paid for you, if you are sick or get injured, by the loan protection policy, for a certain specific period of time only. This time period must be determined right at the time, when you sign the necessary documents for the policy. According to the degree of you need, you should always consult and decide upon this time period. While some make payments for twelve months, there are certain others, who make payments for twenty four months according to the need.
Another important thing that you need to bear in mind is that, before the commencement of the payments, generally there are waiting periods for most insurers. While some companies may make you wait for 30 days, others may have a waiting period of 60-90 days after your illness started or accident occurred for which you have been rendered jobless.