Is Loan Insurance Really Worth It?
One of the scariest things about getting a home or personal loan is what happens if you are suddenly unable to pay the bill. Unemployment causes hardships that lead to depression, but what happens if you also have a mortgage that depends on payment. You can purchase loan insurance that is found in the form of accident sickness insurance, premium protection insurance, redundancy insurance, or unemployment insurance. However, the question comes if the additional cost is really worth it.
How it Works
The first question to answer when it comes to finding out if the insurance is worth it is knowing how the protection works. You can purchase protection from ukhomeandpersonalloans.co.uk that cover you for one to two years. They are ideal for those who are between the ages of 18 and 65, but you must be working when you get the protection. In fact, in most cases, you must be a full time employee to qualify for the loan insurance.
It is also a good idea to know the different types of loan insurance that is available. Most protection policies will allow you to decide the amount of coverage you want, with the maximum length of coverage being two years. However, it does not start to pay until you have surpassed the 60-day exclusion period.
However, there are other loan providers that will offer insurance that is age-related. This protection will be determined on your age, as well as the amount of coverage you desire. It is also only available for a maximum of one year. This can be ideal if you are younger and not looking at making claims, or are older and looking for protection if a spouse passes.
Pros and Cons to Loan Protection
Now that you know how the insurance works and the types available, it is time to look at the pros and cons. The first step is to research if there is actually a policy that is low in cost that will provide ample coverage. If so, then one of the biggest benefits to the insurance is the ability to float through a financial crisis without having damage done to your credit.
However, it is also common for loan companies to scam you out of more money by purchasing coverage through them in promise for a lower rate. If you are told your rates will be lowered, make sure you ask for an itemized list of your loan payment so you can make sure you are getting a lowered rate.
Finally, there are many clauses to insurance policies that you need to be aware of before purchasing. You do not want to be paying for coverage, only to find out you do not qualify when it comes time to needing it. On the other hand, talk to your employer about any financial benefits you have when you are on disability that may cover loan payments.
Ethical loan companies will make sure that you qualify for insurance prior to selling it to you, so many of the cons can be avoided. However, it is in your best interest to look at benefits that you currently have before paying out more money. Insurance on your loans is extremely beneficial if you have no other coverage because it will give you the comfort of knowing your bills will still be paid.