Taking an overseas education loan to finance the higher education can sound as a massive burden for a majority of the overseas education aspirants. The repayment policy of the education loan also concerns most of the students. If unfortunately, any unforeseen incident happens, then in such cases the burden of the loan repayment directly falls on the co-applicant. Therefore, having an overseas education loan insurance can be of an advantage and plays a crucial role in unburdening the co-applicant of the affected overseas education loan borrows.
Advantages of Availing an Education Loan Insurance
There are various benefits attached to availing an overseas education loan insurance on abroad education loan. Read on to know:
• Having an overseas education loan insurance policy safeguards the applicant in the wake of any unforeseen incident.
• The liability of an overseas education loan insurance does not extend to the family member as they are a co-applicant.
• Applicants are not required to pay the premiums of an overseas education loan insurance separately as they are already included in the EMIs of an education loan.
• In case of unsecured education loan from NBFCs, getting an education loan insurance for one’s security is a smart decision.
Education Loan Insurance
A large number of financial institutions consider the parents of the applicant as the co-applicant for both types of education loans i.e., secured overseas education loans and unsecured overseas education loans. In few cases, banks also ask to take the education loan insurance for the co-applicant. Taking an overseas education loan insurance ensures that the burden of entire education loan does not fall on the co-applicant in case of any unfortunate incident and midst of an adverse circumstances. In a secured education loan, after the repayment of loan amount via insurance, both co-applicant and the attached collateral property become burden free. Hence, purchasing an overseas education loan insurance can be of the huge relief to the applicants whose co-applicants are retired pensioners.
Overall Amount of the Loan Insurance
The loan insurance amount on an overseas education loan depends on various factors like age of the applicant, duration of the program, moratorium period and the loan amount. However, to give a general idea, the education loan insurance ranges between 1.5% to 2% of the overall education loan amount. This is applicable for the financial institutions like private banks, government banks and NBFCs.
If a student has availed an overseas education loan from the government bank, purchasing an overseas education loan insurance is not compulsory rather it entirely depends on the applicant. However, when it comes to the NBFCs, in case of an unsecured overseas education loans, it is mandatory to purchase the education loan insurance. Non-Banking Financial Corporation does not ask for any kind of security while availing an education loan hence, they have made it mandatory to pursue an education loan insurance for security purposes.
Payment Process of an Overseas Education Loan Insurance
Once the student has decided to buy an Overseas Education Loan Insurance the next thing that follows is the payment for the same. Applicants are not required to pay the premiums for an overseas education loan separately as the premium amount is already included in the EMIs. These premiums are proportional to the duration of the overseas education loan repayment. To clarify, if the student decides to repay the loan in the span of 5 to 7 years, then the overall premium for education loan insurance will be deducted in the EMIs of these repayment for the limited span.
Education is a paramount, and everyone is willing to acquire the best of quality education but unfortunately it comes with a heavy cost attached to it. In such circumstances, education loan comes to the rescue. Even though applicants are solely responsible for the repayment of an education loan, in the wake of any unforeseen circumstances like death of the applicant, the obligation of the repayment entirely shifts to the co-applicant. Hence it is of the utmost importance to have an education loan insurance, especially when one is applying for an unsecured education loan from the NBFCs.
How will E’LAN Loans help?
Overseas Education Loan insurance is still a new term and not a lot of applicants are aware about it. At E’LAN Loans, we have a huge team of the overseas education loan experts who are experienced enough to guide the students on the same.
There are certain formalities involved in an education loan insurance which can be difficult to understand for a lay man. Hence, connect with us at E’LAN Overseas Education Loans and we will assist you in the overseas education loan insurance process.