19 February, 2025 | 14:27 IST
A personal loan could be helpful in meeting unexpected financial needs. Availing a personal loan could be a suitable arrangement when you may be running short of cash in hand. However, repaying the loan could be a financial burden if not planned well.
As the personal loans come at higher interest rates the equated monthly instalments (EMIs) could be an additional burden for the borrower. Also, non-payment of loans may lead to higher interest amounts, late fees and additional charges, leading to a financial crisis in the future.
It’s prudent to protect yourself against any uncertainties in the future while availing a personal loan, at least to repay the borrowed amount without any hassle. A personal loan insurance could be helpful in covering liabilities for an existing loan.
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Personal loan insurance, or personal loan protection insurance, is designed to help repay your loan in case of unexpected events. In unfortunate incidents of death of the borrower, a serious illness, or disability, this insurance would cover the remaining balance on your loan. It provides financial security for both you and your loved ones during challenging times.
A question that is asked quite frequently is whether you require insurance for personal loans. The simple answer is no. Insurance is not compulsory when you take out a personal loan, though it is offered as an optional add-on. It is important to assess your own circumstances and finances before deciding to purchase insurance for your personal loan. Many banks and non-banking financial companies (NBFCs) offer personal loan insurance while approving the loan against a premium. The insurance policy is generally provided covering the loan amount for the entire repayment tenure.
1. Insurance always gives a sense of peace and security over an existing financial liability like a personal loan. In case of an unexpected event, your family won’t be left under the debt burden.
2. In the event of the borrower’s death or disability, personal loan insurance ensures that the burden of repayment of the loan won’t fall on the family.
3. Personal loan protection insurance is often reasonably priced. It is a small sum when compared to your loan amount. Personal loan insurance can be a small investment to safeguard your family’s financial future.
4. Many insurance companies offer customised personal loan insurance options based on your loan amount and needs, which means you don’t need to overburden yourself.
5. Lenders these days are offering the flexibility of paying the premium for the personal loan insurance lump sum, which is deducted from the loan amount, or adding it to the EMIs.
If you are looking forward to availing a personal loan, digital platforms like Moneycontrol could be your go-to place. You can apply for a personal loan up to Rs 50 lakhs in a 100% paperless process through the Moneycontrol app. The interest rates start at as low as 10.5% per annum.
The lenders offer term insurance and critical illness coverage plans along with the personal loan.
Choosing a personal loan insurance could be a challenging task, given the number of options available. Here are some ways you can make the process easier for yourself:
To conclude, personal loan insurance is a useful precaution that may provide crucial protection to you and your loved ones in case of a financial emergency. Though not compulsory, it is not much of an added burden to tack it on to your loan. Personal loan insurance can offer valuable protection, ensuring that your loan is covered in case of unforeseen events like death or critical illness.
You can apply for a personal loan up to Rs 50 lakhs through the Moneycontrol app and website. Moneycontrol offers personal loans in partnership with 8 lenders. The interest rates start at 10.5% per annum and it’s a completely digital application process.
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