When we borrow a loan, we promise to make regular EMI payments for its repayment, along with interest. You understand how to calculate EMI on personal loan or whichever loan you have borrowed, or use the EMI calculator on the website. If all goes well, we hope to be able to repay the loan as per the loan period mentioned in our documents. But what if something in our plan goes awry? What would happen to the loan if we were to be involved in an accident tomorrow? How would the loan be repaid if our source of income is lost due to an accidental disability? If you took a home loan and something happens to you, how will your family be able to pay the installments?
Loan Protection Insurance: the double seal
This gap is filled by loan protection insurance that acts as double protection for your financial health. Loan protection insurance covers your outstanding loan amount up to the sum insured, in case of death or permanent total disability due to an accident. This loan insurance also covers your EMI payments in case of permanent partial disability, be it a personal loan, a home loan or any other loan. Let’s break it down to comprehend it better:
- Loan protection insurance covers the outstanding loan payments on certain covered loans if the insured or the policyholder loses their ability to pay due to a covered event. Under the policy, the outstanding loan amount will be paid directly to the lender. For you, the premium will be charged on the straight-line method. To avail of this benefit, you just need to attach the loan sanction letter and other loan documents along with the proposal form. The assignment will be done towards the lender in accordance with the guidelines under the Insurance Amendment Clause 2014.
What are the events covered under such a policy?
This event may be disability or illness, unemployment, or another hazard, depending on the particular policy. Should any of these eventualities occur, you can avail the benefits under the sachet insurance of loan protection.
Benefits and covers under the policy can vary.
For example, if you opt for a loan protection insurance from Finserv MARKETS, you get to choose from two options for coverage:
Either you can get a sum insured of Rs. 1 Lakh in case of death / permanent partial/permanent total disability due to an accident. Additionally, you get a loan protection insurance amount of Rs. 5 lakh and EMI payments of up to Rs. 1 lakh.
The other option is to get a sum assured of Rs. 2.50 Lakh in case of death / permanent partial / permanent total disability due to an accident. You also get a loan protection insurance amount of Rs. 20 Lakh and EMI payments of up to Rs. 1 Lakh.
The insured’s entry age should be between 18 years to 70 years.
Make sure you know all the loan protection insurance terms, conditions, and exclusions
Some of these exclusions will pertain to the amounts covered. For example, the outstanding loan amount would not include any arrears due to any reason whatsoever. Some exclusions pertain to the nature of protection event: death by suicide or attempted suicide is excluded. So is any disability or death caused by intentionally self-inflicted injury or illness. To be able to avail the benefits under this policy, the nature and extent of the injury should be established medically with investigation reports, certified by the treating medical professional. On similar lines, if the event happens because you were involved in any hazardous activity, it won’t be considered for claim under the loan protection insurance.
Upon application, attach the loan sanction letter and other loan documents along with the proposal form. Then, if you have a claim, the insurance company will directly pay the outstanding loan amount to the lender. The assignment will be done towards the lender in accordance with the guidelines under Insurance Amendment Clause 2014.
Now that you are fully aware of all the terms that govern the loan protection insurance, you can apply for one online on Finserv MARKETS by just filling a form and furnishing appropriate documents. It is important to note that any loans present at the time of policy issuance will only be covered if the loan sanction letter is attached to the proposal form. Payment will not be made to existing loans whose sanction letter is not submitted.
Therefore, be very rigorous with your paperwork initially, so that you can enjoy sachet insurance protection for as low as Rs 356 in yearly premium.
“Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere”!