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Protect Your EMIs

Loan insurance is a little-known segment, but it is catching on and growing in popularity - because when things fall apart after you've put your hard-earned money into that car or house, this cover can be the difference between holding on to your dream and giving up on it

Photo Credit : Shutterstock

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Human beings are an optimistic lot. We always believe that tomorrow will be better - happier and more prosperous. We believe that we will continue to do well in our jobs and continue climbing the career ladder. And so, in today's consumerist culture, as soon as we settle into a job and achieve some prosperity, we begin pursuing comforts and luxuries - a new home, an expensive car or high-end electronics - with the aid of easily available loans.

We are confident that nothing will hamper our ability to repay that loan - but what if that confidence was misplaced? The best-laid plans could fall apart in the face of some stray misfortune or episode of bad luck, making the money dry up and leaving us unable to keep up with repayments.

For those who wish to leave nothing to chance, loan insurance is the answer to these concerns. This cover helps people stay afloat and continue to repay the EMIs when they are faced with a serious problem that makes repayment difficult during a given period.

So, how does it work?

Loan protection insurance is a form of payment protection insurance. It helps take care of the EMIs or the outstanding loan amount in case of job loss and pays a lump sum in case of death or disability due to accidents or survival post a critical illness. Under a loan insurance cover, the cover is available as a fixed sum insured throughout the policy tenure or the lump sum amount decreases in line with the outstanding loan as a second option.

This means that in case of an unfortunate event, you and your family get respite from the burden of loan repayments on top of your other expenses - and that can make all the difference. For instance, I know of a young man who, just weeks after purchasing his dream home with the help of a home loan, suffered a first heart attack and was unable to attend the office for a long time without pay. In such a situation, the critical illness component of Loan insurance paid the sum insured to the person which helped him continue to repay the loan and run his household till the time he could join his office back post recovery.

Loan insurance is a little-known segment, but it is catching on and growing in popularity - because when things fall apart after you've put your hard-earned money into that car or house, this cover can be the difference between holding on to your dream and giving up on it.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Tags assigned to this article:
personal loan loan insurance EMI finance

Puneet Sahni

Puneet Sahni joined SBI General as Head of Product Development in 2014. He is responsible for managing the entire product life cycle from ideation to product roll-out. Puneet has over two decades of experience in insurance industry, having worked with public and private sector insurers. Prior to joining SBI General, he was associated with Tata AIG General Insurance as Senior Manager- Underwriting and Product Development where he was responsible for handling Personal Lines, Regional Profit Centre Manager- Personal Lines (North). He has closely worked towards launching first of its kind Motor Add on covers and Telematics Pilot project in India. He began his career in 1995 with New India Assurance wherein he was a part of the Underwriting and Claims team. On the educational front, he is a graduate in Commerce from Delhi University and has a Fellowship from Insurance Institute of India. His favorite hobbies include cooking and listening to Sufi music. He is married with two sons.

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