Not many are aware of a unique type of insurance that will cover you in case you are unable to repay your personal loan. There can be many reasons for your inability to repay your loan but, it can lead to significant damage to your credit score as well as your financial planning objectives. This is where a personal loan insurance comes into play.
A personal loan insurance is an insurance policy, which will help you cover the inability to repay the loan amount due to unfortunate and unavoidable circumstances like death or unemployment. This will ensure that the responsibility of the loan repayment does not fall on your dependents. When you get a personal loan insurance policy, you can make the payment of the premium along with the personal loan EMI. You can also choose to make the premium payment upfront.
Here are some things you need to consider before you apply for the insurance policy for personal loan.
1. It is optional
It is not mandatory for all loan borrowers in the country to invest in an insurance policy. There could be situations where the lender will try to sell you the plan but you have to decide whether you need it or not. If you have a high amount of life insurance cover, you might not feel the need for a personal loan insurance.
2. Check the affordability
If you get the insurance plan, you need to keep in mind that the payment of premium will be an additional expenditure for you. Hence, you need to first verify whether you are financially stable and can make the premium payment or not. You need to make space in your budget and cut down on the monthly expenses in order to pay the premium. There is flexibility with regard to the premium payment. You can make lump sum payments or installments but you will have to consider if you can afford an additional outflow.
3. Compare the offers
There are chances you could end up buying an expensive cover because the lender asked you to purchase it at the end moment. If you do your homework, you can get the best loan for yourself. You need to research the market and compare the premium rates offered by different companies. There will be many insurers who will not cover certain circumstances like unemployment and if you buy that cover, you will not be able to benefit from the same. Understand the terms and conditions of the plan before signing on it.
4. Verify pre-closure charges
There are a lot of cases when you pre-pay the loan before the end of its tenure. This is when you could lose the insurance benefits associated with it. You need to verify if there are any pre-closure charges or if there would be any refund of the premium amount paid by you.
Personal loans are a preferred form of borrowing due to a number of reasons. But, Personal loan insurance in India is slowly gaining high popularity. No matter the purpose of borrowing, if you have it, you will remain secure in case of any unpredictable situations. Your family will not have to pay the loan amount because the insurance will provide for it. However, choosing the right insurance is tricky and you need to scout the market and make the best decision. Understand the terms and conditions of the loan and do your homework before you apply for the insurance. Personal loan insurance and personal loans go hand in hand, hence, make a well thought out decision for your financial future.
Applying for Bajaj Finserv Personal Loan with Finserv MARKETS is easy, convenient and completely hassle-free. What’s more? You get a host of other features and benefits that you can avail right from the comfort of your home. So why wait? Avail your personal loan with us, today!
Also, you should read about the personal loan process.
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