Personal Loan Insurance-Should You Consider?
Apr 10th, 2008 by Kaushik Adhikary
Image by l0ckergn0me via FlickrRecently I have had some sort of cash crisis and I was thinking to borrow some money from a friend or relative, but dropped that idea.I seldom request anybody to lend me money or any thing like this. Credit card’s cash with drawl could be a better option instead. However, I instantly dropped that idea too as borrowing charge from credit card is high enough being high rate of interest(normally up to 3% a month) after expiration of a fixed period say 50 days. Finally I’ve chose to go for a personal loan because it is fast in approval and much hassle free.
A personal loan is a great option to have your funds to consolidate your debt and you can take personal loan to further your higher education, repair your car, or even take a vacation.
You may know that personal loans, alike credit card, can be secured or unsecured. Secured loans are often much riskier because you may have to ensure the repayment of the loan by providing the lender with collateral security. If anyhow you fail to meet that repayment, the lender will legally repossess your property, vehicle, or what ever asset you used to secure the loan.
But don’t be worry thinking about the failure. Personal loan is still a better option and offer plenty of opportunity for individuals to improve their overall financial condition. But you should develop a habit of good money management skills. However, certain inevitable incidents in life can changed everything and you may not have control over those things such as unexpected death of the lender, loss of employment, or being a disable person.
Skipping the first issue of unexpected death of creditor, rest of the things can all affect our ability to repay the personal loan. If that loan is a secured type, then you may lose your asset as well, being a collateral security.
Now to protect yourself from all those probabilities, you should consider purchasing a personal loan insurance.Being an insurance guy,I would suggest you to actively consider the insurance option.
I personally feel that personal loan insurance is the best protection you can ever have for repayment of the loan and ensure you to have a peace of mind during the repayment term if you opt for a secured one. The cost of such insurance, however varies, and is generally determined by the outstanding balance of your loan amount. The type of personal loan insurance coverage you choose will also affect the premium too.
There are three types of personal loan insurance coverage to choose from. For Americans, the specific dollar amounts of coverage will depend on the laws in your State and the dollar amount of your loan. But I always suggest you to discuss the matter regarding your personal loan insurance with your lender who you are considering pursuing a personal loan with.
Personal loan death insurance will pay up to a certain dollar amount in the event of the death of one of the individuals on the loan. In that case the nominated person on the policy will be paid in full up to the maximum dollar amount or assured amount. Personal loans generally have a maximum loan amount of $15,000 in the USA, however it is not uncommon for individuals to take out more than that.
Disability Plus personal loan coverage is such type of coverage that most often purchased for personal loan protection. It will pay your monthly personal loan repayments(EMI) up to a certain dollar amount. Additionally you will receive a cash payment of a percentage of your loan amount each month to help you with the cost of living expenses.
Involuntary Unemployment Coverage Insurance for personal loans is very popular. This type of insurance will pay you up to a certain dollar amount per month in personal loan repayments for a fixed time period.
You may be aware of the fact that personal loans are a great financial tool when used properly. Personal loan insurance is very reliable option to help you ensure your repayments regardless of medical issues, unemployment, or in the event of death. And this type insurance is especially important for individuals with a secured personal loan. Not having a personal loan insurance will create a kind situation in which not only your credit score will be negatively impacted, but you would end up loosing your valuable collateral assets that are tied to your personal loan.
You’ll be happy to know that personal loan insurance is very affordable and can often be purchased through the lender. It is important that you educate yourself properly and inquire about it at the time of looking for such personal loans. Most lenders are readily available and more than happy to discuss this option with you as it further assures them they will receive the funds you borrow.
