Getting a personal loan has become simpler for a salaried, self-employed, or even retired person. However, before taking any loan, you must assess whether you need it. First, they come with high-interest rates, and second, you could lose the collateral. In addition, unforeseen circumstances such as temporary disability, job loss, or accidental death can put the borrower's family in a tricky situation. It might get increasingly difficult to pay the equated monthly installments (EMIs). This is precisely where personal loan protection insurance plans come into the picture.
"Just in case you face anything unfortunate, a loan insurance plan will help you tide through it by paying off your monthly EMIs, whether a personal or a home loan. Irrespective of your financial condition, banks and NBFCs in India offer loan insurance schemes to assist you in repaying your personal, car, or home loans," says Anant Ladha, founder, Invest Aaj For Kal, a financial advisory firm.
Naval Goel, founder and CEO of PolicyX.com, explains: "Imagine a situation wherein you have secured a loan, but you are unable to pay off the debt due owing to whether a permanent disability, critical illness, redundancy, injury, or death. It is then a loan insurance protection comes to the rescue. By default, it protects the policyholder by covering the loan repayments or the outstanding amount."
Features And Benefits Of Personal Loan Insurance
Many banks in India offer a personal loan protection plan as an extended service with their personal loans. Here you have the option of accepting or rejecting this value-added service. However, before making any decision, it is important to know its features and benefits.