You've bought a house or an apartment with a bank loan. Of course, the bank will want you to repay the loan. You'd normally use your income to do that. But what if you die and that income suddenly stops? Or what if your partner dies? Solution: Loan Balance Insurance.
Loan Balance Insurance
Don't leave your loved ones to pay off your debt. Loan balance insurance stops this from happening. It's designed to cover the balance of your loan in the event of your death. If you die, loan balance insurance pays out a sum equal to the part of the loan you still have to pay to the bank.
So that you can make sure no one has to fork out for your loan. If you die before the loan matures, your insurer will pay the balance of the loan to your bank. You can also arrange for part of your debt to be paid off if you wish. For instance, by taking out insurance for the whole of your loan.
Is it compulsory?
Loan balance insurance can provide 100% cover against death. You can also take out additional cover in case of unemployment. But it's not compulsory. However, your bank may request that you take out loan balance insurance together with your loan. They often go hand in hand. But it doesn't have to be like that. You might take out loan balance insurance with a bank with which you don't have a loan. Or with a different insurance company.