What is a Personal Loan?
A certain amount of money is borrowed from a bank or lender to use it for a variety of purposes. For example, whether you are planning a trip, starting a business, or planning a dream wedding. However, money can be offered by banks or lenders, the same amount of money has to be repaid with interest.
Nowadays personal loans have become a lifeline for many individuals facing a variety of demands, starting from college funding to medical emergency coverage. In a personal loan, you borrow a fixed amount upfront and then pay it back over time through fixed monthly instalments, plus interest. Personal loans are generally paid back over 1-5 years, though some lenders offer terms of up to 7 years.
What is personal loan insurance?
Personal loan insurance is a protection for borrowers if they are unable to pay back their borrowed money. Personal loan insurance acts as protection by covering your instalments when you cannot make payments. It helps you and your family protect from debt burden. Personal Loan insurance gives you backup during difficulties like job loss, accident, or demise. It can accessed by adding a small extra fee to your borrowed money.
Do you need personal loan Insurance?
Getting a personal loan might bring much-needed financial support, but it also carries the burden of repaying. To protect borrowers from unexpected events that might affect their repayment abilities, several lenders offer personal loan insurance as an add-on.
Eligibility Criteria for Personal Loan Protection:
| Criteria | Details |
| Age | Minimum 21 years, Maximum 65 years |
| Credit Score | 700+ for most lenders |
| Residency | Indian residents and NRIs may be eligible |
| Loan Tenure | 1 – 5 years aligned with personal loan tenure |
| Minimum Income | Rs. 15,000 – Rs. 25,000 per month |
To be eligible for a personal loan protection coverage, you must meet specific criteria:
Age Limits:
Most insurers require that you be between specific ages to qualify for personal loan protection insurance Minimum age to qualify for personal loan protection is 18 and the maximum might range from 59 to 69 years old, depending on the insurance provider.
Employment Status :
Because one of the primary coverages is job loss insurance, you must be employed when applying for the policy. Self-employed individuals may or may not be eligible, depending on the insurer’s policies.
Loan Details:
The size and period of your loan will affect your eligibility. There are normally maximum loan amount limits, and the remaining duration on your loan must not exceed a particular number of years determined by
Health & Existing Conditions :
You may need to meet certain health criteria, especially when you want disability or critical illness coverage. Some pre-existing health issues could disqualify you or result in higher rates. The insurance company may need you to answer medical questions or even undergo a medical examination.
Benefits of Loan Protection Insurance
Financial Protection during Job Loss:
If an individual Loses a job Unexpectedly it puts the person in a difficult situation where he/she is unable to pay their loan amount. This personal loan insurance allows the individual to focus on finding their new job without concern about loan instalments.
Health condition:
A person’s repayment potential is directly related to their health. Accidents or health issues can affect your ability to earn income. This type of situation could bring difficulties in repaying the loan amount. Personal loan insurance ensures that loan repayment amounts are taken care of if the person’s health condition is bad. This brings protection for the person’s financial well-being during their bad times.
Protection in the event of death:
If the borrower has an unfortunate death. Personal loan insurance can offer safety for their family. This policy ensures the borrower’s family does not have to repay the debt during their difficult time. Personal loan insurance saves the borrower’s family from financial burden and reliving from the stress of loan obligation
FAQ:
can a 15000 salary person get a loan?
Yes, the minimum requirement to qualify for a personal loan is Rs. 15,000. Most lenders set Rs. 15,000 as the starting point for personal eligibility based on income.
why a personal loan is rejected?
There are many reasons but the most common reason is income. The lender may reject your loan if your income is less than the minimum income requirement set by the lender
what are the requirements for applying for a personal loan?
Requirements when applying for a personal loan credit score history, income, and documents like PAN card, identity proof, bank statements, etc.
is personal loan insurance good or bad?
Personal loan insurance protects from loan repayments if borrowers face difficulties in repaying debts. If a borrower is not ready to take personal loan insurance, the lender may reject the application
