What is personal loan insurance?
Personal loan insurance is a form of accident, sickness and unemployment insurance.
Accident, sickness and unemployment (ASU) policies generally come in three different types:
The variations determine what the main aim of the policy is. With personal loan insurance, the main objective is to protect the loan repayments in the event of accident, sickness or redundancy. Should one of these events stop you from working then the loan insurance policy will payout the sum insured for up to 12 months. This should provide enough time for you to get back on your feet. At the end of the 12 months, or earlier if you return to work, the payments will stop.
Put simply, if your loan repayment is £250 per month, then this is the amount you need personal loan insurance for. The premiums for loan insurance are extremely competitive and much, much lower than policies provided by the loan companies themselves.
Providers of personal loans rely on the sales of loan insurance to produce a valuable stream of income. They do not have to provide a competitive policy and so the premiums are much higher than a personal loan insurance policy which is available from an independent source.
