There are certain unfortunate circumstances include unemployment, sickness, or an accident which can create a financial as well as social trouble or temporary sometime permanent disability. If you have a mortgage then such type of circumstances may cause the loss of your home or any other assets in case of fails to payment properly. Basically, a Loan Protection Insurance is a type of optional insurance. If you are unable to make your monthly loan payments because of any a predetermined set of circumstances, this insurance will make a monthly loan payment for you.
It is not necessary that loan protection insurance will pay your whole payment of your loan. If you do lose your job, become ill, or are drawn in an accident, your monthly payment will be made for you for a specified period of time. There are some loan insurance policies that offer 12 months for your payments and some offer to make your payments for 24 months. This is all predetermined before you sign your policy papers.
The cost of this very specific type of coverage will depend on many factors. Some of these factors included the person’s age and the state where he lives in, type of policy he purchase type of coverage that he would like and his credit history.
You can use this insurance policy on a car loan, a personal loan, credit cards, or another type of financial loan. There are several alternatives available in the market, so it is up to you how you choose your right insurance policy for your loan or to secure your property against a mortgage. It is also not necessary to buy loan protection insurance for the same place you got loan but you can also buy it from somewhere else.
Mostly loan protection insurance policies charge a certain amount cents per $100 of the loan. Other policies take a certain percentage of your loan amount and decide your monthly premium that way. The higher the loan payment is the higher the payment. Undeniably, your credit history will also create huge effect on your monthly premium. If you have a bad credit score in the past then your monthly premium may be higher.
For most insurers, there is a waiting period before the payments will start. Some companies require 30 days of nonstop joblessness before they pay. Other companies will require you to wait 60-90 days after an accident or illness before they pay. This is all part of the terms and conditions of the policy and will affect your premium payment depending on the coverage you want.
When you are looking for an insurance quote, let the companies you are working with know what type of coverage you are looking for. They will be able to help you find the exact loan protection insurance coverage you need. If you are concerned about making your mortgage payments if you should become out of a job then consider a mortgage protection payment plan that will provide a cash benefit directly to you if you should become jobless.