Linking Insurance With Loan To Ensure Peace Of Mind
When people take loans, especially personal loans
, they come under the obligation of paying monthly installments regularly. The loan repayment amount includes a part of the principal plus interest. Depending on the type of loan, repayments can spread over 36 to 300 months. This means one has to keep on paying 3 to 25 years. This should pose no problem as long as borrowers remain committed to loan agreement terms.We live in highly insecure times. Lifes uncertainties affect all. That is why we take insurance to tide over every possible risk to our health, life and property. This should similarly apply to personal loans. What has insurance to do with loans, you may ask. A lot, if you want to stay committed in settling your debt even in the event of adverse conditions affecting your life.
Loan repayment is always linked to the borrowers employment, business, pension or any other income source. Your repayments are secure as long as you are sure of continual income. But there is no guarantee when your income source will stop. The reasons could be anything - illness, job loss, accident or the greatest inevitability - death.
As you enjoy the peace of mind after taking insurance on almost all things, you should apply the same yardstick when taking loans. Generally, there are two types of insurance related with loans: loan repayment protection insurance and life insurance. The former covers eventualities like unemployment, redundancy, accident, sickness or hospitalization and the latter covers death.
Unlike other forms of insurance like health and car, loan repayment insurance is optional. This means there is no compulsion to buy loan payment protection insurance. It is, however, advisable to link insurance with loan. This will help if you are unable to repay in the event of hard times. The insurance company will step in at such times and will pay the monthly amounts directly to the lender.
So next time you take loan, ask the loan serving agency to cover you under payment protection insurance and/or life insurance. Lenders generally provide repayment insurance loans services for personal loan with bad credit, mortgage loans, debt consolidation loans and business loans.
Of course, the premium will be added to your monthly repayment figure. But if you are ready to bear a small amount, lenders will not bother you in difficult times. Borrowers should know that personal loan is unsecured (no collateral involved) so it is better to cover it with insurance.
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