When taking a loan, you may be offered loan insurance — a product designed to protect you and your family from unforeseen events that could impact your ability to repay. But is loan insurance really necessary?
Vizzve Finance breaks down what loan insurance covers, its advantages, drawbacks, and helps you decide if it’s right for you.
What is Loan Insurance?
Loan insurance, also known as loan protection insurance, covers your loan repayments in cases such as job loss, disability, or death. It ensures your lender gets paid even if you can’t make your EMIs due to emergencies.
Benefits of Loan Insurance
Peace of Mind: Protects your family from financial burden if you can’t repay.
Covers Unexpected Events: Loss of income due to illness, accident, or death.
Easy Approval: Often bundled with your loan for convenience.
Credit Protection: Prevents default and damage to your credit score.
Costs and Considerations
Loan insurance adds to your overall loan cost via premiums.
Premiums vary based on loan amount, tenure, and personal factors.
Some policies have exclusions or waiting periods.
Evaluate if you have alternative safety nets like life insurance.
Do You Really Need Loan Insurance?
Consider if your existing insurance covers loan repayment risks.
Assess your financial stability and dependents’ security.
For high-value or long-term loans, loan insurance offers valuable protection.
For small loans or short tenures, it might not be cost-effective.
How Vizzve Finance Can Help
Vizzve Finance offers transparent loan products and helps you understand optional add-ons like loan insurance so you can make well-informed financial decisions.
FAQs
Q1. Is loan insurance mandatory?
No, it is usually optional but highly recommended.
Q2. Can I buy loan insurance separately?
Yes, you can purchase standalone loan protection policies.
Q3. Does loan insurance cover all types of loans?
Coverage depends on the policy terms and loan type.
Q4. How do I claim loan insurance benefits?
Contact your insurer and lender with required documents in case of an eligible event.
Published on : 10th August
Published by : SMITA
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