Many people do not know what loan insurance is and are unaware of its usefulness if you are unable to make a loan payment. Loan insurance is a form of Payment Protection Insurance (PPI) and provides protection if you take out a loan but are unable to make repayments under certain circumstances.
What kind of cover does loan insurance provide?
Loan insurance covers eventualities such as sickness, ill health, injury from an accident or involuntary unemployment. Any of these may lead to your income being interrupted and, should they occur, you will be able to put in a claim to activate your cover. Your loan insurance will vary depending on your policy but it will provide a monthly payment to cover any loan repayments you may have.
Loan insurance premiums are high and it is worth shopping around to find the best policy. Loan insurance policies differ depending on age and employment status. If you are considering taking out loan insurance, it is worth finding out as much information as you can before making a decision
Taking out loan insurance: advice and information
A great place to get a comparison of costs is at the FSA website Money Made Clear - click here to compare costs.