Loan Protection

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Loan Protection

When you are taking out a loan there is a good possibility that you will also be offered 'loan protection insurance'. This product is designed to meet your loan repayments for a period of 12 months or more in the event that you are unable to work due to accident, sickness and involuntary unemployment.

If loan protection insurance meets your needs and is suitable for your particular circumstance then it is probably a good insurance to have. However think carefully about the terms and the cost of that cover. If you are borrowing money then you most likely do not have money to spare.

No matter how wide the loan protection insurance cover there will still be exclusions which in certain circumstances could be significant to you. Some of the common exclusions are as follows.

Medical conditions that existed prior to the loan protection insurance insurance being taken out.
Chronic re-occurring medical conditions.
Stress related conditions and back complaints are usually only covered subject to certain stricter criteria.
Those who are self employed are usually required to actually have ceased trading rather than just not working because of a lean patch.
Unemployment has to be involuntary even though voluntary redundancy might be common within the industry you work.
Pending unemployment that was known about before the inception date of the cover.

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Loan Protection