Loan Payment Protection Plan
It is sort of an insurance that guarantees you that your repayments are made even when you are unable to work in case of major illness, accident, accidental death or involuntary unemployment.
Types of Loan Protection Plan
Standard
This type of loan payment protection plan provides the lowest level of cover and covers your loan repayment for up to 10 months incase you are unable to work due to an accident or sickness. Standard loan protection plan pays outstanding balance of your loans if you die or suffer from a major injury.
Classic
Having all the benefit of standard cover, classic cover also protects your loan repayments for up to 12 months in case of involuntary unemployment.
Premier
Being the most comprehensive type of cover, it protects your loan repayments for up to 18 months in case you are unable to work due to an accident, sickness or involuntary unemployment. Premier cover also pays outstanding balance in case you die or suffer from a major illness.
The general types of Loan Payment Protection Plan are as follows:
Credit Disability Insurance
This type of insurance makes your loan payments for you so that you do not suffer a financial loss if you are a defaulter on loan payments because of any disability. It covers every thing from auto to personal computer loans.
Credit Life Insurance
Credit life insurance is meant to insure that your family is not burdened with load of debts in case of unexpected death.
Eligibility for Loan Payment Protection Plan
- Your age must be 18 and above or below 65.
- You must be a
- You must be working for 16 hours or more per week.
- Cover offers limited choices if you are self employed or in case of a fixed term contract, in temporary employment or if you are on a maternity or paternal leaves.
Procedure
Although credit disability and credit life insurance can be purchased at any time but the best time is when you go for a loan. The criteria and the procedure of these loan payment protections is not that complicated. Just go and ask your lending representatives about the payment protection plans available in the town. It is easy to obtain in most of the cases like at your credit union. It is even easier if you already have an existing loan at your credit union. In this case you have to just add the credit disability or credit life insurance program to your existing loan.
You have to be very careful while choosing loan payment protection plan. Disability and life insurance plans are very widely spread in
Advantages
- If you have become unemployed for more than 30 days, your monthly repayment is made for up to 12 months
- If you meet with an accident or fall sick, your repayment is made until you go back to work again, otherwise your outstanding balance is paid off.
- If accidental death takes place, the outstanding balance will be paid off in full.
- You can get expert advice when needed as well as rehabilitation services are there to serve you if you are injured.
Disadvantages
- You cannot get loan protection plan in case of self employment or temporary employment.
- You have to face certain pre-existing medical conditions
- You have to be in paid employment for a minimum of 16 hours a week for a continuous period of 6 months.
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