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Loan Protection Insurance

Loan protection insurance or loan payment protection insurance helps protect your monthly loan payments in cases of unemployment, illness or injury due to accident, by providing a supplementary income to maintain your debt repayments.

It can be applied to most forms of personal debt, including personal loans, mortgages, credit card repayments, car loans, and car finance agreements. Loan protection insurance pays monthly benefits up to a maximum of one to two years and is recognized as a general insurance policy because it does not amass any positive cash value. Benefits are only given out after the successful completion of a waiting period.

Loan protection insurance is available to members of the work force between the ages of 18 and 65 who are employed at least 16 hours per week. This type of insurance may also be available to those who have been self-employed for a lengthy period of time or who are employed on a long-term contract.

Finance companies who offer loan protection insurance earn a high commission on each policy sold so it is important to compare policies to ensure you get the best value.

Loan protection insurance policies are available from mortgage brokers and financial institutions.

Even though loan protection insurance is an optional policy, in the case of unexpected unemployment, illness or accident, it will be an invaluable asset. If you pay off your loan early, cancel your credit card or simply no longer need the insurance, you can cancel at any time and you may be eligible for a refund. A small cancellation fee may apply to cover administrative expenses. Always consult your broker for more information.