Loan Insurance

Many mortgage loans have a loan insurance or the so-called Payment Protection Insurance included in the package. Be cautious. You may not be getting your money's worth and you may actually get yourself into unduly costs.

As a matter of fact, your loan insurance may be eating up to 20% of your total costs. You may be thinking that the costs are okay; at least you get something that will cover your repayments in case you are not able to keep up with them.

Think again. Most loan insurances are too good to be true. Come claming time and you are faced with a myriad of exclusion clauses. So much for an assurance; or did they say insurance?

There are telltale signs you need to watch out for when dealing with a loan insurance. These signs should ring a warning. One major cause for an alarm is when a loan insurance is a compulsory requirement of your credit agreement.

You should be aware of the fact that you can buy a loan insurance from anywhere you want. If the company does not make you aware of this, then this should be a good reason to think twice about giving them your trust (or your money). You should be especially cautious if you are unemployed or self employed as you are a favourite victim.

Also, a responsible loan insurance provider should never fail to ask you about other insurance you already have that may actually cover a loan agreement. And oh, be wary of age requirements. They may make you unviable for a claim by the time you need one.

You should also be cautious about loan sharks who tell you that you can only get a loan approved if you sign up with a loan insurance to cover your payments in case you find yourself in a financial mess.

You should stay away from loan providers who don't tell you that you can opt for a manageable monthly payment to cover your loan insurance, instead of a one-time lump sum amount payment that may be too heavy for you. Some loan sharks may not give you a refund for the lump sum amount you paid even after a prompt repayment of the loan you took out.

This is definitely not right. Another misdealing loan sharks may give you is when they increase your loan insurance (after you increased your loan) without first asking for your consent.

Make it a point to inquire about policy exclusions. If the company is not transparent about such exclusions, then you might want to take a step back.

It is both your right and your privilege to be aware of any policy exclusion that may affect you in the future even before you sign up with a loan insurance.Be wary of loan insurance providers who fail to properly explain the contents of the terms and conditions.

If you feel that your loan insurance provider is putting you under too much pressure to sign up with an agreement, then you might want to back away. A responsible and credible company should be ethical enough not to do this.

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