What is loan insurance, and do I need it for a personal loan?

Loan insurance is a type of policy that covers your loan payments in certain circumstances, such as unemployment, disability, or death. The purpose of loan insurance is to help ensure that you can still make your loan payments even if your income is interrupted.  

The decision of whether you need a loan insurance for a personal loan depends on several factors:

If you have limited savings, loan insurance can be beneficial in case of unexpected situations. It can help you avoid late payments, and defaults.

Individuals with unstable or high-risk jobs might consider loan insurance to safeguard against potential job loss and inability to make loan payments.

People with pre-existing health conditions may find loan insurance useful if their health issues could impact their ability to work and repay the loan.

Loans with longer repayment periods may benefit due to the increased chance of defaults during the loan term.

However, it is important to remember that loan insurance comes with an additional cost, either paid upfront or included in your loan payments.

Keep in mind that loan insurance is optional, and not a requirement imposed by financial institutions for personal loans. Ultimately, borrowers should assess their circumstances and weigh the benefits against the additional cost before deciding whether loan insurance is the right choice for their personal loan.