Personal Loan Protection Insurance For Personal Loans.
Consumer credit insurance (CCI) Adelaide insurance companies offer, or loan protection insurance (LPI), as it is commonly referred to is an insurance product designed to protect you financially in the event you can’t work due to sickness, an accident, trauma or involuntary unemployment. Loan protection insurance also incorporates a life insurance component, paying out the loan upon the applicants death.
For most Adelaide people, a personal loan; whether secured or unsecured, will be the largest loan they take out and second only to those that have a home mortgage.
Consumer credit insurance is added to the personal loan amount, adding less than a dollar a day to the repayment. Lenders like cci because they know if an unexpected event occurs; and we all know someone who has had to take time off work due to sickness or accident, they will still be receiving the repayment each month.
Why Include Loan Protection Insurance?
The question to ask your self when deciding whether consumer credit insurance is worth including in your personal loan is:
How would you cope financially in the event of that unforeseen accident, or sickness arising?
No protection can be the cause of:
- Credit rating suffers, because the repayments are not met; either due to having to have a second loan, or because there is insufficient income coming into the household, because they are off work
- Any holiday time and pay that has been saved up, quickly disappears, along with any sick time available
- Any savings are eaten away, as the bills continue to come in, but the income does not.
Loan protection insurance assist in maintaining your financial position and credit rating.
Consumer Credit Insurance Cover Options
There are four types of cover options available.
- Disablement Cover,
- Involuntary Unemployment Cover,
- Life Cover,
- Trauma Cover.
Note: Involuntary unemployment and trauma cover cannot be selected as stand-alone covers.
This option covers you if you can’t perform your employment duties in the event of sickness or accident. Typically with the disablement cover component of loan protection insurance, there is an unlimited number of claims, but there would be a capped amount and generally insurance companies don’t pay for the first 14 days of being disabled.
Many Adelaide residents that play sport on the weekend choose to have disability cover because in the event they are injured, they will have the repayments paid for them, while they are not working, and as a consequence will not have to dip into their savings to repay the loan; especially if the accident caused a severe injury.
Involuntary Unemployment Cover
The insured must be registered with Centrelink. Most insurance companies will not pay for the first 14 to 21 days of becoming unemployed, there would also be a capped amount over generally 3 months.
Many residents of Adelaide that have had a few jobs in the last few years, or have entered a new industry, choose to have involuntary unemployment cover because in the event of them being laid off work, through no fault of themselves, will have a period of time where the repayments will be paid while they look for a new job.
If the applicants dies, the personal loan will be paid out by the insurance company up to an amount of generally $60,000.
Many applicants that are married with children, choose to have life cover because in the event of something happening to them, their family will not have the financial strain of having to pay off a personal loan.
Trauma (“Cash Assist”) Cover
Trauma cover option within consumer credit insurance provides the Adelaide residents with a lump sum payment if they suffer from a heart attack, coronary artery surgery, cancer or stroke. Insurance companies typically pay the greater of the loan balance or up to a maximum limit of $50,000.
Eligibility For Loan Protection Insurance
To be eligible to take out a loan protection insurance policy, you must be over sixteen, under sixty years old and working at least 20 hours a week.
Consumer credit insurance can be included in all personal loans; secured or unsecured.