Importance of Getting Car Loan Insurance Protection

The loan protection insurance can help the policyholders by offering enough financial support at times of need. Whether the need is owing to unemployment and disability, the insurance will surely protect the monthly loan payment and also insure you from proving a defaulter. 

Well, the terms of the car loan insurance policy may differ as per the place where it is being offered. 

The purpose of the insurance

The loan protection insurance helps the policyholder to meet the debts till the predetermined amount. You get short term protection and the policy offers coverage from 12-24 months. The benefit of the policy may be used for clearing up personal loans, credit cards and car loans. 

But then, the one with poor credit history will have to pay higher premium and the policy will be expensive for him. It is beneficial to take up the policy since it helps maintain the current credit score as the policy is all about staying up to date with the loan payment. You continue to pay the loan even at times of financial crisis and so the credit score will not be impacted.

Why to prefer the car loan insurance?
By taking the car loan insurance, you can stay protected when times are tough as you have the insurance cover. This coverage will automatically take care of your EMI and any outstanding car loan amount. 

Hence, it proves even more beneficial at times of death, loss of employment or disability. So, the burden on the family gets reduced in case any mishap happens. The family is saved from the trauma of making payment.

Is there any tax benefit?

Yes, if you consider loan protection insurance, you get tax benefits. But then, if it gets combined with the EMI payment, you will not have the insurance benefit.

Car loan insurance requirements!

· High credit score is the foremost car loan insurance requirements

· The policy can be taken by people between 18 and 65 years of age. The premium is higher for older people

· You must be employed for at least 16 hours a week or self employed

· In case of higher loan amount, you need to pay higher premium

· Anyone suffering from serious ailments need to pay high premium

· Comprehensive and collision coverage is needed for the loan protection

· A proof of continuous coverage is needed

Prior to shopping for the insurance, it is essential to check out the car loan insurance requirements. The full coverage auto insurance is mandatory and certain companies will even ask you to shop for the GAP insurance.