What is Loan Protection Insurance?
Loan protection insurance is a safeguard for lenders and borrowers. It covers the loan amount in case the borrower faces unforeseen events like death, disability, or job loss. It ensures uninterrupted cash flow for lenders and peace of mind for borrowers.
Who is Loan Protection Insurance For?
Lenders: NBFCs, MFIs, Banks, and Digital Lending Platforms
Borrowers: Individuals availing personal, home, business, or auto loans
Loan Distributors & Aggregators: Offering bundled insurance to customers
Why Do You Need Loan Protection Insurance?
Loan defaults can shake your business. Loan protection insurance reduces the risk of non-payment and helps:
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Minimize NPAs and delinquencies
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Safeguard monthly cash flow
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Build borrower trust with covered EMIs
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Enable faster, compliant disbursement
What Does Loan Protection Insurance Cover?
Coverage typically includes:
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Death (natural or accidental)
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Permanent total disability
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Critical illnesses (as listed in the policy)
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Job loss (select plans)
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EMI protection for a specific period
Each plan is customizable to match loan type, borrower profile, and lender needs.
What Isn’t Covered?
Most loan protection insurance policies exclude:
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Suicide within 12 months
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Undisclosed pre-existing medical conditions
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Fraudulent claims
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Losses due to war, riots, or civil unrest
(Always review insurer terms and exclusions.)
