As per the latest report from the Ministry of External Affairs, over 1.33 million Indian students head overseas for their higher studies each year. One thing most of these students prioritize is securing travel and health insurance before they fly out. While the likelihood of needing to use that insurance is often low, we still take it. After all, we Indians are pretty smart when it comes to covering our bases!
But let us face it – the world is unpredictable and any uncertainties in your host country, like the global conflicts we are witnessing can disrupt your ability to repay the loan. So, why not apply the same cautious approach here? That is exactly why this article is here—to help you understand how getting life insurance on your education loan abroad can safeguard you if things go sideways. We are sure that your future self will thank you for this!
So, what's the deal with life insurance? In recent years, there has been a noticeable increase in the number of Indian students opting for overseas education loans. We are talking about a 17% rise in loan applications! Alongside this trend, the demand for life insurance has also grown. This insurance offers a safety net, helping students and families deal with any unpredictable circumstances like sickness, or any untoward incident that we would not surmise.
For youngsters with big dreams of studying abroad, it is nice to have something reliable like life insurance to count on, right? So, let us check how this helps.
Here is how insurance plays a crucial role in protecting borrowers from unexpected setbacks:
Safeguards Both Borrower and Co-Borrower: For many Indian students, parents or guardians co-sign the loan to secure better terms. Without insurance, if something unexpected happens to the borrower, such as a permanent disability or death - fingers crossed it never does, the burden of education loan repayment would fall on the co-signer. Here, life insurance steps in to cover the remaining loan balance so that their credit score doesn't take a hit and avoid any possible legal actions for non-repayment.
Tax Benefits: In addition, some insurance policies may provide tax benefits under Section 80E, which can help reduce the financial burden even further. With affordable premiums and extensive coverage, it is a practical and cost-effective way to safeguard the investment in education.
Affordable and Manageable Premiums: Buying life insurance while the borrower is young means locking in lower rates that won't rise with age. It is like securing a long-term deal for peace of mind! If the insuree waits too long, the premiums can shoot up, making it harder to afford the same level of protection. Whether are living in India or abroad, as long as the insuree keeps up with the payments, he/she will be covered no matter where your life takes!
After looking at the benefits of choosing life insurance with your overseas education loan, let us look at the type of life insurance policies.
Let us now look at something pretty important - the different types of life insurance policies. Do you know why it is worth knowing? Well, you will be able to find the best fit for you based on premiums, duration, and coverage.
Term Life Insurance: First up, this is the simplest and most affordable option. It offers coverage for a fixed duration, typically 10 to 30 years. If something happens to the insuree during that period, the insurance pays out a death benefit to the nominee. The premiums for Term Life Insurance are quite low, perfect for students on a tight budget!
Whole Life Insurance: Next up, there is Whole Life Insurance. Unlike term plans, this policy covers the entire lifetime, provided the premiums are paid regularly. Not only does it protect the insuree, but also saves up some money over time that insuree can borrow in the future. Though the premiums are higher, it acts like a long-term financial security option that also functions as a piggy bank!
ULIPs: Unit Linked Insurance Plans or ULIPs are a combination of life insurance and investment where part of the money goes towards protection, and part of it gets invested in market-linked funds. However, ULIPs come with higher risks as returns depend on market performance. It is suitable for those looking for both protection and financial growth.
Student-Specific Policies: Some insurers offer tailor-made policies for students studying overseas. These plans often cover tuition fees, emergency medical expenses, or even the cost of repatriation in case of death. These policies can be particularly useful for students whose families are concerned about unexpected financial burdens during the study period.
So, while you are busy figuring out how many pairs of jeans to pack, take a minute to think about which of these might be right for you. Remember, the goal here is to make sure you are covered so you can focus on the important stuff – like acing your classes and making memories that will last a lifetime.
Choosing the right life insurance for international higher studies is like picking the perfect backpack for a round-the-world trip. You want one that is comfortable, fits all your needs, and will not fall apart when you need it most! Here is a breakdown of what you should consider making sure you pick the right policy:
Assess Your Financial Needs: Start by calculating how much coverage will be needed in case something untoward happens. This includes debts, living expenses, and other future cost considerations.
Understand Different Policy Types: Don't just go for the first policy you see. Compare options, take suggestions from your friends and parents, or even better – a financial advisor, so that you don’t miss out on a better deal!
Evaluate Premiums and Affordability: Just like you wouldn't blow your entire budget on a designer backpack, it is essential to ensure that the premiums fit within your budget so that you don’t have to survive on ramen noodles during your time abroad!
Check Terms and Conditions: Don't ever skip this step! We are talking about reading terms and conditions or you would miss out on realizing that your policy doesn't cover what you thought it did. For instance, some policies allow you to adjust the coverage or terms as your circumstances change.
Review the Insurer's Reputation: Remember, you are not just buying a piece of paper – you are buying peace of mind. So, take your time to see what other people are saying about the insurer, their track record of customer service, and claim handling to pick a company that will have your back when it matters the most!
With these pointers in mind, you are now set to choose a life insurance policy that meets all your requirements. But here is the big question: Is it mandatory to take out insurance along with your overseas education loan? Let us go uncover the answer.
Turns out, it is not always a must-have, but it is definitely important when you look at all the benefits. Most banks in India do not mandate you to take life insurance with your education loan, but they sure do recommend it. Just like wearing a helmet - not always required, but why take the risk, right?
Some lenders might even offer you better interest rates if you opt for their insurance. Additionally, premiums for this are often integrated into the overall loan amount, making it easier for students to manage.
In conclusion, it is clear that having life insurance in place can be a real lifesaver if the unexpected occurs. Of course, we all hope that nothing bad happens, but as the saying goes, ‘Better safe than sorry.’ Why leave your loved ones with any extra worries, especially after all that they have done to support your journey?
That is where Élan Overseas Education Loan steps in! Whether you need help with overseas education loans without collateral, with collateral or even finding the best insurance options, the advisors here have got you covered.
As we like to say, ‘Plan today so your future can stay bright tomorrow’ - Let Élan be your partner in planning for success, in both your education and financial security!
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