Loan protection services can be a real saver, especially if you are unlucky enough to find yourself out of work for reasons such as illness, accident or employment issues and you suddenly cannot refund a loan you have taken on. If you were to find yourself in one of these situations then without a loan protection insurance you would not be able to pay back your loan and you would be faced with the consequences of debt.
If you do not have the back up of loan protection insurance and you cannot pay back a loan for the above reasons then you may risk having your home claimed by the loaning company. You can also run the risk of having your possessions claimed and your credit file will be damaged. This is why loan protection insurance can help, although it is important to check the type of service you can have as it may not suit your particular case.
In the case of secured loans your home runs the risk of being claimed if you do not make your regular repayments while unsecured loans that are not paid can lead to court claiming of your possessions. Any loans that are not paid or are paid with delays will show up on your credit history.
Most times when you contact a loaning company for a secured or unsecured loan they will propose you take a loan protection service too. However, this is not the solution, as in most cases the terms are very expensive as the loaning company will charge you an enormous amount that will probably cover the entire initial loan plus extra interest on top of that.
There are many street loaning companies that use this strategy as it is very lucrative and will help these businesses recover what they lose when offering low interest rates. However, the classic loaning companies have no experience as far as loan protection services go and may propose an insurance which has no relation with your real need.
You may try taking loan protection insurance as a standalone payment with a different loan protection service. These specific companies offer specific loan protection insurance and are qualified to do so, as well as professionally competent in this domain. You may purchase just the loan protection insurance from them with much lower monthly premiums, usually base on your age.
These loan protection services will usually start paying an income to policy holders when the period determined on the policy starts. These loan protection services may also require you defer all claims from a period between one to three months after you are no longer employed or cannot go to work for health reasons.
Once the period of loan protection payment has started you will then be able to receive a regular income for about one to two years after which these payments will be stopped. However, this can be a great help and will allow you time to find another job or recover and start working again.