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5 Reasons to take an Overseas Education Loan Insurance

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.

Importance of Education Loan Insurance

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.

5 Reasons Why you should take an Overseas Education Loan Insurance

Protect Yourself and Your Co-signer

  • Insurance can provide coverage for the loan repayment in case of disability, illness, or job loss.
  • In the event of the borrower's death, insurance can cover the outstanding loan amount, relieving the co-signer from the burden of repayment.
  • Insurance can help avoid legal action against the borrower or the co-signer in case of default.
  • Insurance can help protect the co-signer's credit score, ensuring future financial stability.

Peace of Mind for Your Family

  • Insurance can provide a safety net for the borrower's family, ensuring that they are not burdened with the responsibility of repayig the loan in case of the borrower's death or disability.
  • Insurance can provide coverage for medical expenses in case of illness or injury, reducing the financial strain on the borrower's family.
  • Insurance can help alleviate the stress and anxiety of unexpected events, allowing the borrower and their family to focus on their well-being and recovery.

Financial Security

  • Insurance can provide income protection in case the borrower becomes permanently disabled or in case of loss of life, ensuring that they can continue to make loan repayments.
  • Insurance can provide coverage for the loan repayment in case of illness, injury, or other unforeseen circumstances that may impact the borrower's ability to repay the loan.
  • Insurance can help borrowers maintain their financial stability and credit score, ensuring that they are not burdened with long-term financial consequences.

Affordable Premiums

  • Insurance premiums for education loans are generally affordable and can be added to the loan amount or paid upfront.
  • Insurance premiums are calculated based on the loan amount and duration, making it easier for borrowers to budget and manage their finances.
  • Insurance premiums may also be tax-deductible, providing additional financial benefits to the borrower.
  • Insurance policies may also offer discounts or incentives for maintaining a good credit score or making timely loan repayments.

Coverage for Unexpected Events

  • Insurance can provide coverage for unexpected events such as natural disasters, political unrest, or other unforeseen circumstances that may impact the borrower's ability to continue their education.
  • Insurance can help cover expenses such as emergency travel, accommodation, or living expenses in case the borrower needs to return home temporarily or permanently.
  • Insurance can help alleviate the financial burden of unexpected events, allowing the borrower to focus on their education and future career prospects.

Now one would question, is it mandatory to apply for education loan insurance? Well to know read further.

Is it Mandatory to Apply for Education Loan Insurance?

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.

Check your education loan for abroad eligibility with us today!

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