Quick answer
Loan insurance (also called loan protection or borrower protection insurance) repays your outstanding loan if you die — or, with some plans, become disabled or lose your job — before the loan is fully repaid. It protects your family from inheriting the debt.
How loan insurance works
The cover is linked to your loan amount and tenure. Premiums can be paid once (often added to the loan) or regularly. On a valid claim, the insurer pays towards the outstanding balance as per policy terms.
Benefits
- Protects co-borrowers and family from repayment
- Helps keep a mortgaged home in the family
- Optional add-ons for disability, critical illness or job loss
Common exclusions
- Suicide within the first policy year
- Undisclosed pre-existing conditions
- Hazardous activities specified in the policy
- Job loss due to resignation or misconduct (for job-loss covers)
Who is eligible
Borrowers within the insurer’s age, income and health criteria. Some covers require medical tests for higher amounts.
Frequently asked questions
What does loan insurance mean?
Loan insurance is cover that repays all or part of an outstanding loan if the borrower dies or suffers another covered event during the loan term.
Is insurance mandatory for a personal loan?
Usually not. Lenders may offer it, but borrowers can generally decline it or arrange equivalent cover. Confirm with your lender and read the sanction letter.
Can I cancel loan insurance?
Most policies have a free-look period after purchase. Cancellation and refund rules after that depend on the insurer and policy type.
Insurance is the subject matter of solicitation. Please read the sales brochure and policy wordings carefully before concluding a sale. Benefits, exclusions and waiting periods vary by insurer and product. Product availability, eligibility, premiums, interest rates, benefits and approval are subject to applicable terms, conditions, underwriting/lender policies and eligibility criteria.