Loan Payment Protection

Obtaining loan payment protection insurance ensures that borrowers can honor financial obligations in the event of chronic illness, job loss, or even death. When borrowers sign installment contracts, there is no guarantee that untimely events may prohibit repayment. Workers can become chronically or terminally ill, disabled through an accident or injury, or laid off due to plant closures and corporate restructuring. No one can be expected to continue making payments without employment; and the financial strain caused by a lack of work can severely impede a worker's ability to recover physically or emotionally. To ensure that monies are repaid in spite of a borrower's loss of employment, credit unions, banks and lending institutions offer a measure of certainty through additional insurance policies which safeguard their investment and the borrower's credit reputation.

Loan payment protection policies pay off outstanding balances for employed individuals who find themselves unable to continue working as a result of layoffs or disability. Spouses and families of a sole or primary breadwinner don't have to suffer financial hardship if the head of household dies or is permanently disabled. Payment protection insurance policies repay monthly notes for the duration of the installment agreement. Some policies offer coverage up to specific dollar amounts, as high as $30,000 to $60,000. Other insurance pays monthly installments directly to survivors, spouses or unemployed policy holders, which can amount to nearly 75 percent of the insured's monthly salary. Some policies provide weekly groceries to ill or disabled policy holders or survivor families. While most policies generally do not cover retirees, some provide coverage for older adults up to the age of 80 during hospitalization.

A good loan payment protection insurance policy provides an umbrella of safety during troublesome times when employees are out of work. Similarly, God provides a safe haven in times of adversity. "God is our refuge and strength, a very present help in trouble. Therefore will not we fear, though the earth be removed, and though the mountains be carried into the midst of the sea" (Psalms 46:1-2). Consumers who apply for loans may feel that purchasing repayment insurance is an insignificant and expensive venture. However, when illness, disability, or even death prevents employees from earning income to meet expenses, that extra bit of coverage could well be a lifeline for workers and or survivor families. Repayment insurance contracts help workers, spouses and families from relying on public assistance during periods of unemployment or losing valuable assets, such as a vehicle or equipment. Truckers, self-employed contractors, painters, and other workers whose employers do not offer sufficient compensation in the event of layoffs or plant closures can all benefit from insurance which, at minimum, guarantees that financial obligations will continue to be met until regular employment can be obtained.

The kinds of financing which can be insured through loan payment protection policies vary. Loans for home equity, automobiles, recreational vehicles, electronic equipment, heavy duty trucks, construction equipment, motor homes, and appliances may all apply. Most protection plans do not cover home mortgages. Mortgage banks, credit unions, and other lending institutions will generally offer a separate insurance policy for a new home buyer, which pays off the mortgage upon the death of one or both policy holders. Likewise, automobile dealers and finance companies also offer additional coverage for borrowers which automatically eliminate outstanding balances in the event of the borrower's death or disability. After a worker's death or disability, the more installment loan debt can be eliminated, the better individuals and family members are able to maintain a reasonable standard of living and cope with catastrophic health and employment issues.

Almost any individual over the age of 18 who is gainfully employed at least six consecutive months prior to signing a loan payment protection insurance policy is eligible for coverage. The best time to apply for policies is at the time applicants are approved for bank or credit union financing. Payment for the additional coverage may become part of the installment agreement, therefore lenders and borrowers are assured that the policy stays in force during the duration of the contract. Borrowers with pre-existing conditions at the time of application, especially life-threatening or chronic illnesses, such as AIDS, HIV, or cancer, are excluded from loan payment protection coverage. Pregnant workers are also excluded, as are employees who have been fired or voluntarily leave the job. An active insurance policy is terminated upon final repayment of an outstanding loan balance, or in the event that the policy holder defaults or retires from employment. Of course, insured individuals should check with policy issuers to determine the specific options of each clause.

In an uncertain economy, with unemployment reaching an all time high, the wisest move for any employed borrower is to safeguard one's credit reputation and ensure financial stability for loved ones by investing in a comprehensive loan payment protection policy. In the event of disability, loss of work, or chronic and debilitating illness, outstanding balances can be repaid in spite of a loss of income. Personal financial planners may recommend obtaining procuring loan payment protection for each major installment contract. Most policies are reasonably priced and can be incorporated into the monthly note. Individuals seeking information or rate quotes on payment protection insurance can browse online or consult a local financial planner or advisor. Consumers should remember to read the fine print and get a good understanding of the provisions offered through installment contract repayment insurance. In the final analysis, workers will find that having a policy in place just makes perfect common sense.