A Personal Loan is a great way to fund your urgent personal expenses. You can use the loan to finance your travels, wedding, hospital expenses, etc. The application process is fast, and only minimal Personal Loan documents are required.
But what happens if you can't repay your loan due to an illness or loss of income? In such cases, your Personal Loan insurance policy can cover your remaining instalments. Insurance is a way of safeguarding yourself, but is it mandatory to take insurance for Personal Loans?
What is Personal Loan insurance?
Personal Loan insurance is designed to cover your loan instalments if you find yourself unable to pay your dues. The policy covers unfortunate situations like loss of income, disability, critical illness and death. If you have Personal Loan insurance, you or your family will receive financial assistance during these risky events.
Is it mandatory to have insurance for your Personal Loan?
It is not mandatory to have insurance for Personal Loans as there is no legal requirement for this. Banks do not make it compulsory to get a loan protection insurance policy. You can choose to opt for a loan protection insurance policy to protect yourself from the burden of loan repayments during unfortunate circumstances.
Is it a good idea to insure a Personal Loan?
If you are wondering, is insurance mandatory for a Personal Loan? the answer is 'No'. However, a loan protection insurance policy offers many benefits -
- Security: A Personal Loan protection policy gives you a sense of security because it secures your loan repayments during unfortunate circumstances.
- Financial assistance: The policy can provide financial help to you or your family in difficult situations.
- Money-back feature: With the money-back feature, you get a discount on your premium if you have not made a claim under the policy. Check if your chosen policy has a money-back feature or not.
3 things to consider before buying Personal Loan Insurance
1. Coverage
Read the policy documents carefully to understand which events are covered and which are not. To avoid insufficient coverage, make sure that the policy covers major risks like illnesses, disability, death and loss of income.
2. Cost
Compare the premiums of various insurance policies before choosing one. Consider the monthly premium and the total cost of the insurance over the loan term.
3. Claim settlement process
Understand the claim settlement process for your insurance company. Make a note of what documents are required, read the terms and conditions, and check the claim settlement ratio before making a decision.
Also Read: Personal Loan terms and conditions you should know
Conclusion
Read the policy documents carefully to understand the coverage, claims process and costs of your insurance. Is insurance compulsory for Personal Loans? No, it's not! However, a loan protection insurance policy is a great option for securing your loan repayments during unfortunate events.
Are you looking for a Personal Loan? Apply for a quick, paperless Personal Loan with Axis Bank for amounts up to ₹40 lakh. The Personal Loan is offered at competitive Personal Loan interest rates and has flexible repayment plans ranging from 12 to 84 months.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
