How can you protect your instalments on secured loans?

To cope up with unforeseen circumstances like accident, sickness, job loss, and death, many financial companies now offer payment protection covers on loans. Since different customers have different requirements, at different stages in their lives, companies offer tailored cover options to meet the individual needs of the borrowers.

Financial experts from the UK loan market say that these payment protection covers are vital especially for secured loans. This is due to the fact that the borrower puts his home as collateral and if he defaults on the loan payments due to any reason; his home may get seized by the lender. So, to minimise the risk of repossession of the asset at stake, availing a payment protection cover is vital.

These protection plans are a type of insurance that protect the instalments on your secured loans. Thus, they are also known as PPI which stands for Payment Protection Insurance. These plans are not mandatory but advisable, especially in the case of secured loans. Under this, the borrower agrees to pay a certain amount along with the loan instalment to the lender every month and in most cases, gets back the total amount refunded at the end of the loan tenure.

The biggest advantage of these loan plans on secured loans is that if the borrower fails to carry on with his loan instalments, the PPI instalments will be used to repay the remaining amount. One can avail PPI scheme on secured loans from the lender or from any reputed insurance company in the market. The following are some of the PPI schemes available on secured loans:

Single cover for the employed- This covers the following:

• Accident and disability cover
• Involuntary Employment Cover
• Life Cover

Single Cover Plus for the Employed- In addition to the benefits of the 'Single Cover' plan on secured loans, the borrower's partner also gets life cover, if his/her name is mentioned on the credit agreement.

Joint Cover for the Employed- If you have jointly taken a secured loan with your partner, both of you will get payment protection insurance. Therefore, you both get the reassurance that your loan repayments will be made when any one of you face any financial paucity.

Single and joint cover for the Self Employed- In this case, the borrower or borrowers get the following:

• Accident and sickness cover
• Hospitalisation cover
• Life cover
• Loss in business

There are a plethora of loan plans available in the UK loan market. One can choose a plan according to his/her needs. These protection plans can save your home from getting repossessed in case you are unable to keep up with the monthly instalments on secured loans.