A loan is anything where you have taken finance out from a creditor or lender. They include personal loans, credit cards and mortgages. They may be secured against your home or unsecured. These loans are usually repaid on a monthly basis, either until the balance is cleared or for a fixed-term duration.
Loan Protection Insurance
Sometimes the unexpected occurs, meaning that you find yourself in a position where you are unable to make a repayment on your loan, whether that be through illness, loss of income or separation.
By taking out loan protection insurance, you are protected from these circumstances, and the policy will pay out monthly, providing you with an income. When taking out the policy, you can choose whether the insurance protects you for a short- or long-term period.
You will pay a monthly premium, and the insurance will cover around 70% of your usual income, on a tax-free basis, providing you with the finance to continue with loan repayments and pay your monthly expenses.
Loan protection insurance is useful for those who are at risk from redundancy or who would only have the benefit of statutory sick pay to rely on should they be unable to work through illness or accident. You can compare quotes between lenders to establish what monthly premium would be suitable for your needs.
Loan Agreements
Before taking on any form of loan or finance, it is always recommended that a local agreement is in place, even if you have borrowed money from friends or family.
In terms of a mortgage, this is the agreement between the lender and the purchaser.
For details of a specialist law firm that can assist you with drafting a loan agreement, visit https://www.parachutelaw.co.uk/loan-agreement. A specialist service can also register a loan agreement against a borrower’s property and provide advice when this is a second charge against a property after the mortgage lender.
Having a solid loan agreement in place serves to protect both the borrower and the lender. Accompanied with a loan protection insurance, this ensures that you have your financial interests covered even when life throws you a curve ball.
