Loan Protection Insurance

Purchasing loan protection insurance can provide policy holders with a defense against life's unexpected challenges. Circumstances that impact personal finances can occur without warning. Unemployment or health problems can quickly leave an individual without income. With no money coming in, making good on monthly payments is impossible. Consumers who purchase these policies do not need to worry about such hardships. In the event of a job loss or impairment that keeps a worker off the job, loan protection insurance will continue to pay the policyholder's debt. These policies may come as an option on unsecured personal loans or on automobile loans and other lending options. In addition, these policies can also be purchased independent of any loan agreement. Individuals who are currently employed and at least eighteen years old can generally take out this insurance, which can pay benefits over the course of twelve to twenty four months or longer. When a policyholder is back on his feet and able to resume financial liabilities, the payments from the insurer will cease. In the event of a policyholder's death, the debt may be forgiven, leaving the grieving family unencumbered by this indebtedness. As always, a wise consumer will research these plans and make sure that they understand the fine print on any agreement.

Another form of loan protection insurance is a product called Guaranteed Asset Protection, or GAP. Often used in conjunction with automobile loans, these policies are designed to cover the "gap" between the current value of the vehicle and the loan balance. This gap exists because most standard vehicle policies will only cover the market value of the insured automobile. Once a car is driven off the dealer's lot, the market value of the vehicle will rapidly plummet. Unfortunately, the balance of any financing that was utilized to purchase the car will not plummet in the same fashion. If a borrower's car is stolen or destroyed through vandalism, natural disasters, or accident, the money that is owed on the vehicle could greatly exceed the value that is assigned by a standard insurance policy. Filling in that gap protects the insured's ability to make good on the vehicle financing. For example, if a vehicle is totaled one year into the loan that was used to purchase it, the policy may set a value of $12,000 on the automobile. However, the borrower may still owe $15,000 on the car. This leaves a gap of $3000. A gap policy would close that gap by paying the $3000. Needed loan protection insurance can make a big difference for borrowers who wish to make good on personal liabilities.

Disability and credit life policies can also provide a valuable safeguard for anyone who wishes to keep their credit ratings on track regardless of personal circumstances. This type of loan protection insurance will kick in if a policy holder becomes ill, has an accident that prevents them from working, or becomes permanently disabled. Should a family breadwinner pass away, many of these policies will cover the payments on debts or will pay off the debts entirely. Home mortgages can also benefit from this type of loan protection insurance. One of the benefits of these policies could be a guaranteed monthly income should an insured individual become permanently disabled. Even partial disabilities could be covered with some policies. Many policies will cover as much as seventy five percent of the insured individual's income. Self employed business owners can also benefit from business expense insurance. These products will help the entrepreneur meet the financial demands of a small business during difficult times. Life insurance policies can also help survivors pay off debts should a policy holder die. A credit policy will help a consumer in a number of ways. These policies will aide the insured individual by keeping track of credit ratings, alerting the policy holder in the event of a sudden change in a credit score, and informing the insured of the possibility of identity theft.

Unexpected illnesses can be difficult for any family to cope with. Added financial devastation can sometimes be too much to bear. Crisis recovery policies are a type of loan protection insurance that address these kinds of situations. A serious medical crisis such as a life threatening diagnosis can carry a double whammy for many families. In addition to concern over the ailing family member, the loss of that loved one's income can throw a household into bankruptcy. Insurance products that are geared toward these situations can prevent such financial devastation. When an insured individual receives a serious diagnosis, a lump sum will be paid to the family in accordance with the policy agreement. Coverage can be quite extensive, depending on the plans that are offered by the insurer. In some cases, policyholders will be given discounted rates in honor of healthy life habits such as not smoking or getting regular exercise.

Business expense policies are especially useful for policyholders who are trying to operate a small business, or who are self employed. Should a self employed entrepreneur become disabled, these policies can provide a monthly income over a specified length of time. This kind of loan protection insurance will meet liabilities during the business owner's illness or impairment. Making financial choices can be difficult. According to the Bible, God offers believers both wise guidance and real joy. "Thou wilt shew me the path of life: in thy presence is fulness of joy; at thy right hand there are pleasures for evermore." (Psalm 16:11)