Loan Payment Protection Insurance – Worth The Cost? Nowadays, when you apply for a loan, you are almost certainly provided payment protection insurance. If you are taking out a large loan, the idea may appear quite appealing. If you lose your work or have a medical emergency, these insurance products will take over loan repayments. But what are the real costs and advantages of this? Given that over a billion dollars are paid on this type of insurance in the United States each year, it is worth considering.
Loan Payment Protection Insurance Cost
The truth is that the lending sector has become increasingly competitive in recent years. Lenders have sought strategies to increase their earnings as interest rates have continued to fall. One solution they have devised is to provide a variety of supplementary loan-related products, such as payment protection insurance. What may surprise you is that payment protection can frequently cost as much as the loan interest payments. Payment protection repayments can, in some cases, essentially treble the loan’s cost. With such shocking effects, customers must exercise caution when choosing such solutions.
Do you want to be at ease? Loan Payment Protection Insurance
Many people will assume that as their lives and work become increasingly uncertain, the peace of mind provided by such policies is worth the cost. This is true in some circumstances, but not always. Every insurance policy is different, but one thing is constant: it is difficult to get an insurance policy to pay out. You should carefully read the tiny print of your policy; you will be surprised to learn what is truly covered and what exclusions and exceptions apply.
For example, unemployment benefits may only be available after a particular time of unemployment, may not be available if the unemployment was voluntary, and may demand documentation that the claimant has actively sought and turned down jobs since losing their work. In most cases, this will provide the insurance company with literally dozens of reasons to refuse payment.
Do Not Take The First Quote! Loan Payment Protection Insurance
In addition to these conditions, it would be great if you shopped around. The individual from whom you are borrowing will always give you a policy, but it is unlikely to be the best policy available, and a little research will go a long way. You will almost certainly find better terms or conditions that better fit your needs. Although government guidelines are in place to ensure that such policies are explicit and in plain English, consumer protection groups continue to receive complaints about them.
The primary recommendation here is to exercise extreme caution when purchasing expensive insurance products. Make sure you understand the terms and believe they will benefit you, and say no if you do not want the policy.