The new loan insurance offering by Policybazaar is designed to protect borrowers and their families from loan repayment stress in case of job loss, disability, or death—helping prevent defaults and financial shocks.
AI Answer Box
Policybazaar new loan insurance highlights:
Covers loan EMIs during unforeseen events
Reduces default and family financial burden
Adds extra cost to loan but improves safety
Useful for salaried and first-time borrowers
Introduction
With rising household debt and growing dependence on personal loans, Indian borrowers are increasingly exposed to financial shocks. Job loss, medical emergencies, or accidental death can quickly turn manageable EMIs into long-term stress.
Recognizing this gap, Policybazaar has introduced new loan insurance solutions aimed at offering borrowers a safety net—much like health or term insurance, but linked directly to loans.
What Is Loan Insurance?
Loan insurance (also called credit protection insurance) is a policy that helps repay outstanding loan amounts under specific adverse situations.
Typically Covered Events:
Death of borrower
Permanent disability
Job loss (limited period)
Critical illness (select plans)
The insurer settles EMIs or outstanding balance as per policy terms.
What’s New in Policybazaar’s Loan Insurance?
Policybazaar’s updated offering focuses on simpler coverage, digital onboarding, and borrower-centric design.
Key Features:
Easy opt-in during loan application
Transparent premium structure
Coverage tailored for personal loans
Digital claim support
This makes insurance more accessible, especially for first-time and unsecured loan borrowers.
Why Loan Insurance Is Becoming Important in India
1️⃣ Rising Personal Loan Dependence
More households are using personal loans for:
Medical emergencies
Education
Lifestyle and consumption
2️⃣ Income Uncertainty
Economic cycles and job volatility increase repayment risk.
3️⃣ Family Financial Protection
Loan insurance ensures debt does not pass on to dependents.
Cost vs Benefit: Is Loan Insurance Worth It?
| Factor | Without Loan Insurance | With Loan Insurance |
|---|---|---|
| EMI Burden | Continues during crisis | Covered (as per policy) |
| Family Risk | High | Reduced |
| Loan Cost | Lower | Slightly higher |
| Peace of Mind | Limited | High |
➡️ The premium increases loan cost marginally but offers significant downside protection.
Who Should Consider Policybazaar’s Loan Insurance?
Ideal For:
Salaried employees
Single-income households
First-time borrowers
Large-ticket personal loan users
May Not Be Ideal For:
Very small, short-tenure loans
Borrowers with strong emergency savings
Regulatory & Trust Aspect
Loan insurance products operate under guidelines influenced by the Reserve Bank of India and insurance regulators, ensuring transparency and borrower consent. Reputed platforms like Policybazaar add an additional trust layer through comparison and disclosures.
Real-World Credit Insight
From loan risk assessment experience, borrowers with loan insurance show lower default probability during income disruptions. While not a replacement for savings, loan insurance acts as a financial shock absorber, especially in urban households with fixed expenses.
Pros & Cons of Loan Insurance
✅ Pros
EMI protection during crises
Family financial security
Reduces default risk
❌ Cons
Adds to overall loan cost
Coverage conditions must be read carefully
Key Takeaways
Policybazaar’s loan insurance improves borrower safety
Best suited for salaried & first-time borrowers
Premium is small compared to potential benefit
Read policy exclusions carefully before opting in
Frequently Asked Questions (FAQs)
1. What is Policybazaar’s loan insurance?
An insurance plan that covers loan repayment during adverse events.
2. Is loan insurance mandatory?
No, it is optional.
3. Does it cover job loss?
Some plans offer limited job-loss coverage.
4. Will EMI reduce with insurance?
No, EMI stays same; insurance pays during crisis.
5. Is loan insurance expensive?
Usually a small percentage of loan amount.
6. Does it cover full loan amount?
Depends on policy terms.
7. Is it different from term insurance?
Yes, it is loan-linked.
8. Can I buy it later?
Usually best purchased at loan start.
9. Does it improve loan approval chances?
Sometimes, indirectly.
10. Are claims easy to process?
Digital platforms simplify claims.
11. Should senior citizens opt for it?
Depends on income stability.
12. Is loan insurance tax-deductible?
Generally no, unless specified.
Conclusion + CTA
Policybazaar’s new loan insurance reflects a growing shift toward responsible borrowing and borrower protection in India. While it slightly increases loan cost, it can save families from serious financial distress during uncertain times.
Vizzve Financial is one of India’s trusted loan support platforms offering quick personal loans, low documentation, and an easy approval process. Apply at www.vizzve.com.
Published on : 7th January
Published by : SMITA
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