What is loan insurance?
Loan insurance helps prepare for the unexpected. It provides financial support to protect a borrower from unanticipated life events such as death, disability or unemployment. Loan insurance will cover monthly loan payments so they are not missed. It is sometimes referred to as payment protection insurance (PPI).
Who provides loan insurance?
Most insurance providers are able to offer loan insurance. Discuss with your loan officer to discuss the right provider and plan for your needs.
What are the benefits of loan insurance?
- Insurance will help maintain your credit score, since your payments will still be made monthly.
- There are different types of policies including standard and age-related policies. These policies have different costs depending on where you live, what type of policy and how much coverage you choose and your credit history. Finding the policy that is suitable for you can help control costs.
- Injured at work and unable to perform your job? No problem! Your insurance can include disability coverage, usually up to 12 payments while you are recovering and getting back to work.
What’s the downside?
- Make sure you review your policy terms, conditions, clauses and exclusions before purchasing. For example, under-insurance an excess requirement, or if it does not provide a payout if you work part-time, your self employed or are working on a short-term contract
- Read the plan carefully and know what is covered before you stop making payments on a loan to verify your claim has been approved.
Tips to Remember When Deciding
- You have the option to purchase insurance from an independent broker after your loan is finalized with your bank or credit union.
- Choose a plan that fits you! Different individuals require different coverage. Ask questions about what is or is not covered.