Loan insurance can be a lifesaver if the worst happens and you can't work because of an accident, being sick for a long time, or being laid off. A policy will cover you for a certain amount of money and a certain amount of time, usually around 12 months but sometimes up to 24 months. This means that you would be able to keep making monthly payments on a loan, credit card, or other borrowing. But it can only be a good safety net if you buy the policy the right way.
Policies have exclusions, which are usually hidden in the fine print. If you don't read the fine print, you might not know about them. This could mean that if you try to file a claim for something that isn't covered, you won't get paid. You'll have wasted your premiums and have to worry about how to pay your bills. Most people don't bother to read the fine print when they buy a policy from the same company as their loan or credit card because they think they have bought a policy they can use.
To find the right policy for you, it's important to shop around and work with an independent specialist provider who knows the ins and outs of the industry and can share their knowledge with you. Also, the standalone provider can give you the cheapest premiums on a policy, which can make a big difference compared to what the high street lender tells you.
Since money is often tight, which is why you take out a loan in the first place, it makes sense to get the most important coverage for the least amount of money. High street banks are known for charging premiums that are much higher than they should be in order to make huge profits, even if this means giving bad policy advice to customers. So loan insurance can be a lifeline, but only if you get it right. Before you buy, do a lot of research on the market.
