![]() ![]() What are the things to check before applying for loan insurance? With this knowledge of the types of loan insurances and their differences, it is important to choose the policy which best fits you and to read all the terms, conditions and exclusions before making the decision. Older individuals are more likely to make claims because of deterioration of health and unemployment. Younger individuals are usually quoted with lower premiums because of their likelihood of making fewer claims. The age-related loan protection insurance policy takes into account the age of the policyholder and the amount of coverage they want with the maximum period of coverage being 12 months. Also, the loan insurance does not pay until after the initial 60 day exclusion period. This type of loan insurance is widely available with most loan providers. ![]() The policyholder can determine the amount of coverage they want with the maximum coverage period being 24 months. The standard loan protection insurance policy does not take into account the policyholder’s age, gender and occupation. There are mainly two types of loan protection insurance policies. What are the different types of insurance for loans? Health: The premium amount to be paid is higher for individuals with poor health because the likelihood of claims is higher during that period.Age: The premium is higher for older individuals when compared to younger individuals because it is considered that the younger individuals tend to make fewer claims as they are more likely to be employed and in the pink of their health.Repayment Period/Tenure: If the tenure of the loan is long, the premium to be paid is high. ![]() If the loan amount is high, the premium to be paid is also high. Loan Amount: There is a direct relationship between the loan amount and premium. ![]() The premium amount varies from bank to bank and from one insurance company to another. Premium is the amount to be paid by the policyholder for signing up for the loan protection insurance policy, just like for any other insurance. How are premiums decided for loan insurance? Some insurance companies also provide death benefits to their policyholders. For either of the policies, the individual has to pay a specific premium amount with the assurance of availing the benefit of the policy as a policyholder during times of unemployment or disability. There are two main types of insurance policies, known as a standard policy and age-related policies. Loan protection insurance provides coverage for personal loans, home loans, car loans, credit cards, etc. To qualify, the individual must be employed for a minimum of 16 hours per week or be self-employed for a specified period. These policies are for people between the ages 18-65, who are employed at the time of purchase of the policy. This is decided based on the loan amount and the type of policy chosen by the borrower. Loan protection insurance helps the borrower repay the monthly loan payments for a predetermined amount of time, usually between 12 and 24 months. But how does one decide which policy to choose and at what cost? Are there different types of loan insurance? We will discuss the answers to all these questions in this blog. The insurance company pays the monthly loan payments for a specified period on behalf of the insurer. In such situations, ‘loan insurance’ or ‘loan protection insurance’ comes into play. This could be due to disability, unemployment or any such unforeseen event. However, life as we know it is very uncertain and unpredictable, and there might arise situations due to which an individual becomes incapable of repaying the loan amount. A loan is a certain amount of money or debt borrowed by an individual from the lender or bank with the condition of paying it back through regular monthly payments. ![]()
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