Study loans have become a valuable financial tool for students dreaming of pursuing higher education. They cover all costs associated with your education. However, taking a loan has a financial string, which makes some of you think about financial burdens when it comes to repayment. You are left wondering: What happens if you cannot repay the loan on time? This thought deters many of you, leaving you worried about loan repayment. This is where education loan insurance comes in. It reduces the financial risk of a study loan. It serves as the backup if unfortunate events occur and you cannot pay the loan amount on time.
Are you wondering about applying for study loan insurance? The blog will cover the reasons you should apply for insurance against your education loan, what is covered under it, its importance, benefits, and payment process. Continue reading the guide to know more and clear your queries!
Investing in studies needs a great financial commitment. However, securing an insurance policy against your education loan is beneficial, safeguarding you and your family from financial challenges. Discussed below are some benefits of education loan insurance:
Insurance against study loans provides you with financial security. It safeguards you from loan defaults because of unforeseen circumstances.
The extensive coverage that study loan insurance provides is one of its primary benefits. They generally cover the entire loan amount to safeguard you, your family, and your co-signer. Hence, they help you avoid the financial stress of paying off your education loan.
Insurance against a study loan helps you and your co-applicants pay off the debts. This lets you focus on your studies and careers instead of worrying about finances.
Study loan insurance aids in unforeseen circumstances such as serious sickness, terminal illness, permanent handicaps, etc. You and your family can rest assured that your insurance policy will pay for your financial responsibilities even in challenging times.
In addition to securing you financially, education loan insurance offers multiple tax benefits. According to the provisions under sections 80C and 10(10D) of the 1962 Income Tax Act, the premium you pay for insurance against a study loan is eligible for tax deductions.
Some insurance policies against study loans offer add-on advantages like interest rate concession. Taking into account the considerable cost reductions is an added benefit of study loan insurance.
Loan providers charge varying loan insurance costs for education loans for studying abroad. The table below shows different loan providers and the insurance amount they offer on student loans:
The table below lists some banks, their insurance partner, and the premium type they offer:
Costs Covered Under Education Loan Insurance
Tuition fees are covered under education loan insurance. It covers tuition if you cannot repay the loan due to any reason. This prevents uninterrupted education and frees your family of these expenses.
Pursuing education abroad is more than attending classes; it is about accommodation, food, and other expenses. Education loan against LIC policy covers the costs of living, safeguarding you and your family from sudden financial hardship.
The security against non-repayment of loans is among the most significant coverages of education loan insurance. It covers debt repayment in the case of unfortunate events like serious illness, incapability, death, etc. This frees your family and the co-signer of the loan repayment financial burden, letting you focus on their health or grief without stress.
A few study loan insurance policies provide coverage for pre-existing medical conditions, safeguarding you against health discrimination
Once you decide to opt for insurance against your study loan, it’s time to understand the payment procedure. Let’s closely look at how insurance charges are incorporated into the loan amount and the payment options:
The fees for study loan insurance do not need separate payment. The charges for an education loan against LIC policy are integrated with the loan amount. For instance, if you apply for a study loan of around Rs, 40 lakhs with insurance charges of around Rs.50,000, the approved loan sum will be Rs.40.5 lakhs. Hence, you can search for additional insurance financing for your school loan.
Insurance premiums are generally added to the loan amount. However, some insurance companies offer flexible payments. You can pay the premium in one go or instalments together with your loan EMIs.
To understand the exact premium amount of your education loan and its aftermath on the loan balance, you need to read the loan and insurance documents carefully. Loan premiums and insurance firms must be transparent about pricing and clearly define premiums and insurance costs.
Listed below are the factors you should consider when choosing a lender for an education loan against LIC policy:
Education loan insurance protects students and parents in the case of non-repayment of a study loan. It is a valuable investment for guaranteeing one’s academic future, providing financial security and a peaceful mind. It instils confidence and secures your future if any unfortunate event occurs. You should consider opting for education loan insurance and choose the one that suits your needs. While choosing such an insurance policy plan, read the terms and conditions carefully and approach reliable financial service companies to be free of financial stress. This safeguards your academic investments and prevents debt from becoming a burden
