Credit Insurance on a Personal Loan: What Is It?
If there's one truth one must live by, it's that nothing is for certain! Certainty is far from what one must feel towards the future—instead, one must feel certain that there is no certain future. Unfortunately, not everyone can prepare for the uncertainty of what's to come. But thanks to personal loans, you can finance your needs when you don't have enough in your bank account.
Nevertheless, you never know when you might get into another unforeseen situation. Suppose you lose your job, become disabled, or pass away. What happens to your personal loan payments, then? Well, that's what credit insurance is for!
What Is Credit Insurance for Personal Loans?
Credit insurance protects you against certain risks that may happen in the future. The insurance will usually cover you from unpaid personal loan payments if you can no longer work due to sickness or injury or if you lose your job due to layoff or termination.
You and the lender agree to pay your personal loan through regular installments when you take a personal loan. If you fail to pay your monthly or quarterly installments, or default on the loan entirely, your lender can take legal actions to recover their funds.
If all else fails, the lender can even send you to jail—but not if you have credit insurance.
The Benefits of Credit Insurance
The main advantage of credit insurance is that it protects you from financial loss when something unexpected happens. If you're hospitalized for an injury or suffer a prolonged illness that prevents you from working, you'll still be able to pay your personal loan.
Without credit insurance, you'd have to resort to draining your savings or taking out a different loan to pay your interest and principal on the personal loan you'd taken out before.
Credit insurance also has various other benefits, such as covering the following:
The cost of your personal loan if you get laid off, if you're fired, or if you're made redundant.
The prices of some treatments and surgeries, including cancer treatment, heart surgery, and organ transplants.
Certain legal settlements, such as the cost of your legal defense if you're criminally charged in the future.
Funeral expenses for you or your family members
Your debts, including your personal loan if you're deceased, so your loved ones won't have to deal with your debt.
Key Considerations to Ponder
When you consider the implications of credit insurance, there are several factors you must keep in mind. First, you must sign a separate credit insurance contract before taking out a personal loan. You must also sign an updated contract when renewing your credit insurance policy.
Second, you must take out credit insurance from the same insurer as the personal loan. Don't just take out credit insurance from any insurer. Instead, check the exclusions and conditions of insurers first before taking out a policy.
Finally, you must ensure that your policy provides sufficient coverage for your personal loan. If you're planning on taking out a personal loan that's bigger than your insurer's maximum coverage amount, you should consider taking out a bigger insurance policy as well.
If you're planning on taking out a personal loan, you should consider taking out credit insurance as well. Remember that you never know when life will throw you a curveball! Given the many benefits of credit insurance, you must consider taking out a policy if you're planning to get a personal loan. This way, you're prepared for all the twists and turns that life may throw at you.
Are you looking to apply for an excellent personal loan? Then, Shelby Finance Company can help! As one of Memphis’s best personal loan companies, we offer financial help to anyone short on funds. Call today at 901-542-8212 to learn more about how we can help you!