Personal Loan can be used for a variety of purposes. Be it a wedding in the house, wanting to take a long vacation or even any financial or medical emergencies. Since these loans usually are short term loans and are unsecured, they come with a higher rate of interest. But along with the Personal Loan there comes “Personal Loan Accident Cover” which most of us do not have much knowledge about. Here is a complete breakdown on the Personal Loan Accident cover and how it really works.
What is Personal Loan Accident Cover?
Personal Loan Accident Cover mostly come into use to help in covering the costs of the Loan Repayment when some unexpected situation knocks on our door, like not being able to go to work because of some major illness or injury. This remains a voluntary cover so it depends from individual to individual whether they wish to go for the accident cover while applying for the personal loan.
What does Personal Loan Accident Cover include?
While applying for the personal loan cover, it depends from which financial lender you want to avail the personal loan from. The lenders usually include the following in the personal loan accident cover:
- Serious Illness or Accidental Injury
Personal Loan Accident Cover mostly includes illness or accident depending on the kind of accident cover you have. One can easily claim this cover in order to get some financial assistance. Check with your policy and lender whether there is any waiting period to claim the cover and for other exclusion that may apply along with the terms and conditions.
- Loss of Job
In an unfortunate incident of losing your job unexpectedly, do not lose hope! With Personal Loan Accident cover, you can easily claim the benefits in order to ease out with the financial stress. So, you can contact your financial lender to get the best deal for you in such an unexpected situation. Though, the accident cover might not be of a big help if you voluntarily quit your job or accept a voluntary redundancy.
- Loss of Life
Some of the accident policies also cover the balance of the loan if you unexpectedly pass away. Your financial lender can help you with every detail on this depending which cover you have chosen.
What are the points NOT covered?
There are various exclusions which are not covered in the personal loan accident cover. It is important to be aware of some of them so one can avoid confusions. Depending on the policy that you choose, here are some of the points that may not be included in your cover:
- Being employed on a seasonal or fixed term contract basis
- Quitting your job, retiring or accepting voluntary redundancy
- Self-inflicted injury
- War related claims
- Pregnancy and Childbirth
To be fully aware of the accident policies, you must go through the Terms & Conditions of the policy before signing the agreement and asking your insurer if you have any questions regarding the same.
Any Eligibility Criteria required?
There are a few financial banks and institutions who may check the Loan Applicant’s eligibility in order to apply for the Personal Loan Accident Cover. The eligibility criteria may include the age, the employment status, financial history, residence details, repayment capability of the Loan Applicant etc.
How is Personal Loan Accident Cover calculated?
There are a number of factors that are considered while calculating the Accident Policies:
- The type of cover and features you choose: Whether it is cover for life, for job, sickness or unemployment, each of the combination of options will carry different costs. The features chosen also depend on each type of cover can also influence the cost.
- The Loan Amount and the Term: The size of the loan and the tenure will play a major role in calculation of the total costs.
- Repayment size: The total cost of the entire loan along with the Personal Loan cover will differ depending on the monthly payments.
- Age: Your age plays a crucial role while applying for a Personal Loan accident cover. Most of the financial institutions keep a strict check of the age and on the basis of age, the loan cover is calculated and then agreed by the Loan Applicant.
Does it include any time period?
Depending on the policy that one may choose, there might be a waiting period from when you take out the policy and from when you claim it. There may be another waiting period from when you become ill, injured or out of work till you claim. Though some of these situations occur at the most unexpected time, it is always better to have some amount in your personal budget where you can use it any time and for any urgency. Personal Loan Accident cover might on one hand be the best option but because of time limitation, it can at times lead to delay which might cause a big financial loss in your life. And as financial experts say, it is better to be financially prepared than sorry.