Is loan protection insurance the right decision for you?
Published on : September 24, 2021

There would be times in life when you face a financial emergency and need to avail a personal loan. The reason could be anything ranging from buying an electric vehicle or a down payment for a house or an education loan or a medical emergency. No matter what the reason, a loan becomes a liability that you need to repay. Only the interest rates and tenures vary.

A personal loan is an unsecured loan that can be availed of without the need to specify the end purpose. You can use it for any legal purpose. The eligibility criteria for a personal loan are very simple. If you are an Indian citizen or resident over the age of 21 years and earning a net monthly income of over Rs 30,000, you are eligible to apply for  personal loan.

Getting a personal loan is as easy as cake walk at LoanTap. All you need to do is fill up an online application form and upload the following documents –

  • PAN Card
  • Aadhaar Card
  • Salary Slips for the last 3 months
  • Bank Statement of the Salary Account for the last 6 months

Once this is done, the LoanTap team will evaluate your application. If everything is in order, your loan application will be approved and your account will be credited within 24-36 hours.

LoanTap offers personal loans from Rs 50,000- Rs 10,00,000 for tenures ranging from 6 months to 5 years. Interest rates start at 18% p.a. You are free to repay the loan after 6 months without any prepayment penalty. You can get a variety of repayment options to choose from and you can pick the one that suits you.

Getting the loan is the easy part. The responsibility is on you to repay the loan without any delay or default. Remember, that in the event of any unforeseen event, the responsibility of repaying the loan will pass on to your family. Death, disability, terminal illness, unemployment are all grim realities and they can come without warning. What can you do to protect yourself and your family from such a financial crisis?

Well, personal loan insurance exists to protect you from such a situation. If an unforeseen event like death, disability, critical illness or unemployment takes place, the insurance provider will pay the outstanding liability and prevent the burden from affecting your family.

What are the features of a Personal Loan Insurance Plan?

  • The personal loan insurance policy covers death, disability, unemployment and critical illness.
  • You can take this as an individual loan insurance plan or a group insurance plan.
  • Your co-borrowers can also be included in the insurance plan.
  • You can choose a plan where the sum assured remains constant through the policy term or a plan where it decreases with each year. The premiums would vary accordingly.
  • You can choose the single pay option or pay it periodically over the loan tenure. In that case, the premium would be added to the EMI.

What are the benefits of a loan insurance plan?

A Personal loan insurance plan alleviates the burden of repayment in case of unforeseen circumstances and can be a godsend for the family. If the co-borrowers are also covered by the policy, it makes it even better. The premium paid for personal loan protection insurance can be claimed as a deduction under Section 80C of the Income Tax Act up to Rs 1,50,000. So you can get a tax benefit while you protect your loan.

What are the points you need to consider while buying personal loan insurance?

  • Buying loan insurance is not compulsory. Lenders offer this option to borrowers in order to help them choose the option of financial prudence. If you feel that you can handle the repayments comfortably and don’t foresee any exigencies, you can opt-out of buying the policy. However, financial prudence demands that if the personal loan amount is high, having coverage is always safer.
  • Before buying the insurance plan check out the events that it will cover. Some cover only accidental deaths and disability while others may include natural death, unemployment and critical illnesses as well. It is best to go for the most comprehensive insurance policy available.
  • Compare the different loan protection plans available in the market and pick the one that has the best benefit structure at the most affordable premium.
  • Premiums are dependent on the amount of loan, tenure, your age and current medical condition. 
  • Make sure that the premiums are manageable as they would be added to your EMIs and create an additional monthly outgo.
  • Loan protection insurance is usually tied to the tenure of the loan. The insurance would end in case of prepayment of the loan. Make sure you check the foreclosure clause before buying.

Taking a loan protection insurance is a hedge against unforeseen circumstances that you have no control over. It will keep you at peace since the insurance will protect your family in the event of something untoward happening. You will still need to pay your EMIs regularly. However, in case of a default due to something going wrong, the insurance provider will take over and your credit score won’t be impacted. If you do the homework and get the best possible plan, you can relax since you have bought yourself peace of mind.

For all your personal loan needs, do visit LoanTap and we will be happy to assist you with the right products and advice. Keeping your family safe from unnecessary burdens is important and personal loan protection insurance helps you to do just that. Get the personal loan when the situation demands it but make sure you get the insurance coverage too. As the old adage goes, “It is better to be safe than sorry.”

Related blogs – What is Loan Insurance? Personal Loan Insurance Explained