Loan Protection Insurance – Is It Right For You?
Given the growth of Cambodia’s economy, the rise in income has contributed to a thriving real estate market. This has led to many Cambodians purchasing homes and property for the first time. But taking out a loan for a home or property is a major financial commitment in life for many. Depending on the type of loan, you may be committing yourself for up to 30 years of installment payments. And what will happen to your home or property if you suddenly die or become totally disabled due to an unfortunate event? Someone in your family will have to fulfill the loan obligation and continue with the loan repayment, otherwise they will ultimately face foreclosure. This is where Loan Protection Insurance comes in.
What is Loan Protection Insurance?
Loan Protection Insurance is a type of insurance policy designed to provide you financial protection in the case of death or total disability to cover your loan obligation so your family will not be burdened with paying off your debt. There are different types of Loan Protection Insurance with coverages and benefits that varies between insurance providers but generally there are two options to choose from which are level and decreasing coverages.
- Level – refers to coverage that remains fixed throughout the term of the loan. If the benefit payout is greater than the outstanding loan balance at the time of death or total disability, the excess amount will be provided to your family or loved ones.
- Decreasing – refers to coverage that decreases throughout the term of the loan to match the outstanding loan balance as the principal balance is repaid. Decreasing coverage is generally less expensive than level coverage with a similar coverage amount and term.
Eligibility and Costs
The acceptance of coverage and the insurance premium amount for Loan Protection Insurance will depend on a variety of factors including your age, gender, loan interest rate, coverage amount, term, and health condition. Generally, the healthier and younger you are, the lower the insurance premium amount will be.
Is It Right For You?
The question of whether Loan Protection Insurance is right for you is largely dependent on your specific needs and situation. If you are worried that your home or property will be foreclosed by your lender in the case of your death or total disability, Loan Protection Insurance could be a great option to provide you and your loved ones with a peace of mind. It can be an inexpensive alternative to cover your family’s long term financial needs compared to settling the outstanding loan when no insurance coverage is in place. Be the responsible person by minimizing your financial risk through insurance and leave a legacy of love for your family, not your debt!
If you think Loan Protection Insurance is something you require or if you would like to learn more about it, please contact us today!