What is Loan Protection
Loan Protection insurance is one of the wide range of options included within this lifestyle protection policy. You can join the scheme to help you pay your monthly loan repayments in the event of accident, sickness or unemployment preventing you from working resulting in a loss of your income. You may simply use your Loan Protection Insurance to cover the monthly amount you pay for the loan and then cancel your insurance policy when the loan is paid off. Alternatively you can add other regular monthly commitments to your cover and keep the insurance for your whole working life.
Why do I need Loan Protection?
Many people fail to consider what might happen if they were to lose their income but a legitimate question to ask is, who will pay my loan payments if I can't? Mortgage Payment Protection is a popular product but quite often consumers with such cover do not consider their loan payments as well and this is included in the list of commitments that must be met whether you are working or not. If you lost your income you will still be expected to continue the payments towards your loan so Loan Protection Insurance will ensure you can continue to meet your obligations until you can get back on your feet.
Is Loan Protection worth having?
If you do not have savings put aside to tide you over if you were to lose your income and you were willing to spend it, then perhaps Loan Payment Protection is not necessarily the right policy for you but you have to decide. Why not add together all your monthly outgoings and then see if your savings would continue to pay those monthly outgoings and maintain your lifestyle for up to 12 or 18 months. If you consider your savings are not sufficient then Loan Protection Insurance can help safeguard the loan you may have taken on your car or continue to pay the bank loan that is still outstanding.
When should I buy Loan Protection Insurance?
You must have a loan in place to take out Loan Protection Insurance and be able to prove it exists in the event of a claim. In order to qualify customers must satisfy the following simple criteria: Aged between 18 and less than 63 on the start date of the policy, in full time work (16 hours a week or more) and living in the UK, not off work due to ill health, must have regular, identifiable financial commitments and unaware of any impending unemployment, or potential failure of the self employed persons’ business. It is therefore important to be covered by a Loan Protection Insurance policy before you become aware of any potential redundancy.