Studying abroad can be a life-changing experience, but it comes with a price. Many students turn to education loans to finance their overseas education. But with this financial decision comes the need to consider the safety net of insurance. Insurance on an education loan can provide protection against unexpected events which can take away the ability of the borrower to pay back the amount they had taken.
In this article we will discuss the importance of Education Loan Insurance and the 5 reason to why you should take it.
It is common knowledge that a student must have both parents sign as co-applicants when applying to finance their Foreign Education Loan. This is applicable for both, secured and unsecured loan type. Buying loan insurance protects the co-applicants to repay the total loan amount plus interest in the event of a borrower's insolvency.
Suppose the loan applicant experiences an accident or sickness during their time studying abroad that is expected to be fatal and the doctors suggest that you should not stay in that country, in such case, the insurance company will pay off the loan balance, removing any financial responsibility from the co-applicants.
(*Note: The above mentioned point depends upon the insurer, thus it is crucial to talk thoroughly with your insurance provider before signing on the dotted line.)
The purpose of putting so much emphasis on it is that no one has seen tomorrow, but to secure it is always a good choice. Thus, it is important to get your Loan Insured.
Note: Some banks might demand that the borrower purchase insurance to cover the student debt. The insurance fees are typically a one-time payment and can vary from 1% to 2% of the loan amount. Before choosing an education loan, it is crucial to discuss the insurance costs with the bank.
In terms of Secured Loans which requires collateral, you have to get the mortgage property insured to, it is non-negotiable. Most Public/Private Banks and NBFCs who offer Unsecured Overseas Education Loan already have a clause in which they have made insurance a must.
Now further let’s look at the reasons, or rather one can call them scenarios, where if one has insured their Study Abroad loan, then they did the right thing.
Now one would question, is it mandatory to apply for education loan insurance? Well to know read further.
It is not mandatory to apply for an overseas education loan insurance, but it is highly recommended. An overseas education loan insurance, also known as a student travel insurance policy, provides financial protection against unexpected events such as medical emergencies, accidents, or even trip cancellations during the course of your studies abroad.
Without insurance, you may have to pay for such unforeseen events out of your own pocket, which can be very expensive and even put a strain on your finances. An overseas education loan insurance ensures that you are covered in case of any such emergency, giving you peace of mind and allowing you to focus on your studies.
Additionally, some lenders may require you to take out an insurance policy as part of their loan requirements, so it's important to check with your lender to see if this is the case.
Taking insurance on an education loan is a wise decision that can provide protection, peace of mind, and financial security to borrowers and their families. The cost of insurance premiums is generally affordable and well worth the investment. It is essential for students to consider the various insurance options available and choose the one that best suits their needs and budget. By taking the necessary steps to protect themselves and their co-signers, borrowers can focus on their academic journey and make the most of their overseas education experience.
To get end-to-end assistance in getting the loan from the best lenders in India, from public sector banks to NBFCs to International Lenders, approach ELAN Loans, as we are partnered with more than 17+ banking institutions.
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