What to Know About Loan Protection Insurance Before Purchasing a Policy

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent, and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or network providers. Read more about our Editorial Guidelines and How We Make Money.
What Is Loan Protection Insurance?
What Are the Benefits of Loan Protection Insurance?
Credit Score Protection
Loan Payment Protection
Risks of Having Loan Protection
Extra Cost
Interest Charges
Is Loan Protection Insurance Required?
Types of Loan Protection Insurance
Credit disability insurance. This covers loan payments when you can’t work because of illness or injury. Credit life insurance. If the policyholder dies, this insurance will pay part or all of the remaining balance of a covered loan. Credit property insurance. When personal property is used as collateral for a loan — and the asset is stolen or destroyed by accident or disaster — this policy provides protection. Credit involuntary unemployment insurance. Lose your job through no fault of your own? This type of loan insurance may cover your monthly loan payments for a specified number of months.
What Does Loan Protection Insurance Cost?
Questions to Ask Before Purchasing a Loan Insurance Policy
What’s the cost of the credit insurance? What would my annual percentage rate be if I buy add-on loan insurance? What would my APR be if I decline loan insurance coverage? How much loan insurance coverage will the policy provide? May I cancel credit insurance after buying it?
Consolidating debt and financing home improvements are among the many uses of personal loans. You may refinance a personal loan with another loan. The annual percentage rate (APR) of a personal loan can include origination fees.
Common Reasons for Being Refused Loan Protection
Part-time employment Pre-existing medical conditions Short-term employment Self-employment Employment resignation
Part-Time Employment
Pre-Existing Medical Conditions
Short-Term Employment
Self-Employment
Employment Resignation
Alternatives to Loan Insurance
Consider Life Insurance
Consider Disability Insurance
Build Your Emergency Fund
The Takeaway
Frequently Asked Questions
Photo credit: iStock/Vertigo3d
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About the Author
Kelly Boyer Sagert is an Emmy Award-nominated writer with decades of professional writing experience. As she was getting her writing career off the ground, she spent several years working at a savings and loan institution, working in the following departments: savings, loans, IRAs, and auditing. She has published thousands of pieces online and in print.
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