There are several factors which you can not control, that can cause you to be unable to make payments on a loan that is your responsibility.
You may get sick or be involved in an accident that takes you out of work for an extended period of time. It could be that your employer has had to cut down on the number of people he employs or the wages have had to be lowered; or if you are self-employed, there is a chance that your business has not earned you enough to keep up your payments.
It could be that your expenses have increased or interest rates have risen since you first received your loan and this has made it difficult for you to make your payments.
Worry about such things may be heavy on the mind of some people who are of retirement age or well beyond retirement age and also for the people who have small children.
These are some of the reasons why loan insurance, an insurance policy that protects against the possibility of one’s inability to make repayments, is offered. You will usually be offered loan insurance every time you take on credit, however, it must be understood that you are not obliged to take loan insurance and you cannot be denied credit for not taking it. When you do decide to use the loan insurance, it is wise to shop around for the best rates, as they will vary from provider to provider, and you should not go with the first insurer you contact.
If you do decide to use the personal loan insurance, you can rest a little easier knowing that if certain events not in your control occur, your loan payments will be paid on your behalf.
You must be aware of the conditions and exclusions included in the policy agreements before you agree to any type of personal loan insurance. Too many people pay for loan insurance without much prospect of ever benefiting from it and sometimes without even knowing whether or not they have it. These are some of the reasons you should thoroughly research all offers you receive for personal loan insurance before agreeing to take it.
Some people actually agree to loan insurance coverage without knowing they are receiving it, because lenders are anxious to add it to your account as a way of increasing their own revenues.
No matter how impractical it seems, sometimes these personal insurance policies will state a requirement that you take the first job you are offered after losing your present one, with no regard to the level of pay being offered.
If you were to be given time to search for a better paying job, it is entirely possible that you would be able to find a new job that is a more suitable match for your work experience and pay level.
It is always best to have direct knowledge about the insurance you are paying for, and if it is not something you want, do not buy it. If you discover that insurance has been added to your account without your express knowledge or permission, notify your lender and have it canceled with no delay. No one wants to pay for something that they don’t intend to use and especially if they did not request it be intiiated in the first place.