Christian Loan Repayment Protection
The main purpose of Christian loan repayment protection is to ensure that payments on outstanding loans, such as mortgages and credit cards, will continue to be paid if the borrower is unable to work due to layoffs or some type of medical disability. These policies offer peace of mind to those who worry that unfortunate events or circumstances beyond their control might prevent them from being able to adequately provide for the needs of themselves or other family members. Peace of mind is not the only benefit obtained from having repayment protection policies. An individual's credit rating is also protected from harm. Otherwise, a continued inability to repay outstanding loans could cause a person to end up in a situation where he not only has no income, but also loses the possibility of anyone being willing to extend him credit until the situation improves.
One of the main types of exclusions from policies providing for loan repayment protection is for a disability resulting from a pre-existing condition. Critical illnesses which occur before a certain introductory period -- say, the first three months of coverage -- may also be excluded because insurers may assume the presence of a pre-existing condition. A state of unemployment entered into voluntarily could also cause benefit claims to be denied. Employees whose bad behavior results in their being fired also are ineligible for receiving benefits. All insurance policies contain exclusions of one sort or another, and these may differ from company to company, so it is very important to read policy materials carefully before signing.
Another item to investigate with loan repayment protection policies is how long the waiting period is until payments are issued. Some companies may make the policyholder wait anywhere from 30-90 days before issuing payments. Others may backdate the time period from the first day of unemployment or illness. Since mortgages and other types of loans need to be repaid regardless of personal circumstances, this could make an important difference with regard to late fees or other penalties for delinquent repayment. The length of payout time also should be specified. Some companies which offer loan repayment protection make payments for 12 months. Others may extend payment for 24 months.
Legitimate businesses will provide information about all details of the policy on their websites or in contract materials. This underlines the importance of knowing exactly what features are included in the loan repayment protection policy before these are actually needed. If these matters have not previously been investigated, and the borrower finds himself in a situation where payment will be delayed, be sure to contact creditors as soon as possible to assure them that payment will be forthcoming. Creditors are usually much more willing to work with borrowers who are demonstrating their willingness to repay outstanding loans. Ignoring the matter will not have any positive outcome, since this will appear to creditors as though a person is evading responsibility. There also is an emotional toll in avoiding the responsibility of repaying loans, or in delaying dealing with difficulties related to these matters. Often a person is surprised to see how much relief he feels after taking some sort of proactive action in settling debt issues. Establishing a regular repayment plan can soon result in great strides being made in resolving debt issues with integrity.
Creditors sometimes add the cost of loan repayment protection to the loan amount in a lump sum. Since interest will be imposed upon the entire amount this can significantly affect the cost of the loan. Prices for various protection policies can be compared with an Internet search. Other features of the repayment protection policy can also be explored before actually choosing an insurance company. In this way, a policy can be specifically designed to meet the level of coverage which the customer needs.
In these uncertain economic times, having loan repayment protection for major outstanding loans is a wise choice. An interesting study can be made in the Bible as to the matters of borrowing, lending and the repayment of debt. These matters are taken quite seriously, and a good amount of space is devoted to observations and instruction about money matters. One thing which is made clear is that the state of being in debt is never supposed to be a long-term, ongoing situation. In both the Old and New Testament, provisions are made for the needy, yet personal responsibility and individual initiative in providing for daily needs is also encouraged. Another interesting observation is that while business matters are acknowledged as legitimate pursuits, spirituality is vitally connected with financial practices. One's financial dealings are never 'just business'.
Although practical provisions are made for dealing with situations involving borrowing and lending, avoiding the responsibility of repaying outstanding loans is routinely associated with wickedness. As far as proper procedures for creditors, charging high rates of interest, especially to fellow believers, is frowned upon. Rather, a person is encouraged to have an attitude of being willing to help another individual in his time of need, instead of using the situation for personal gain: "Withold not good from them to whom it is due, when it is in the power of thine hand to do it. Say not unto thy neighbor, Go, and come again, and to morrow I will give; when thou hast it by thee. Devise not evil against thy neighbor, seeing he dwelleth securely by thee." (Proverbs 3:27-29) In this passage, and in many others, financial matters are put in their proper perspective. Understanding these matters may be the very best type of loan repayment protection.
Christian Loan Repayment InsuranceLoan repayment insurance can help a person maintain a certain standard of living, bypass some financial risk, and protect their family assets. Used as a shield against financial and physical calamities; such coverage can literally save a person's financial life. Safeguards, of all types, are available just in case something goes wrong. Life, health, and auto coverage are available in case of death, illness, or a car accident; respectively. Loan repayment insurance, which is also called payment protection insurance and loan protection insurance, is no different. Although rarely needed, if a person does need it and doesn't have it, they might end up ruining their financial lives.
Monthly debts increase monthly expenses and ultimately financial risk. Making minimum payments are easy enough for most people. Minimum monthly payments allow people to purchase necessities and most luxuries immediately and to pay for them over a long period of time. That's been the American way for many years. But, this system sometimes gives people a false sense of security. Those minimum payments on credit cards allow people to easily rack up thousands of dollars in debt without really realizing it. A person who is strong and healthy and works to maintain monthly obligations can easily overextend themselves if they are not careful about money. Loan repayment insurance is needed when those optimum conditions don't exist.
If a person becomes temporarily or permanently disabled and/or unable to work, in most cases they will lose a portion of or all of income. That's where loan repayment insurance comes in. The policy usually covers things like accidents, sickness, hospitalization, bankruptcy, death, and terminal illness. For example, if an accident occurs causing a loss of income, this protection would cover the payment for the period in which the income is decreased. If income was lost for one month, payment is made for only one month. And, if income is lost for nine months, the claim would last for nine months. Also, if the loss is permanent, the whole bill can be paid off.
In the mortgage industry, this type of indemnity is called mortgage protection insurance; not to be confused with private mortgage insurance or PMI. PMI is purchased by the borrower, but PMI only benefits the lender while, mortgage protection insurance is available for purchase to the borrower and the borrower is the beneficiary. When looking at insurance coverage at the time of a purchase one should consider the fact that the cost of loan repayment insurance is relatively low. Further, the cost of this type of coverage is justified if there is a situation when a claim must be filed. Particularly in the case of a mortgage; which is usually the highest monthly bill a person pays, a good plan is like the helping hand of a lifeguard in the open sea. When an individual is unable to pay because of any of the covered reasons, this safeguard kicks in.
Year after year people make their payments on time; never needing to file a claim against their loan repayment insurance. This also gives people a false sense of security. If one is wise, the optional loan payment coverage will be included on every purchase in which it is available, simply because you never know what will happen. "His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord." (Matthew 25:21). The more time one is fortunate enough not to need coverage, the more likely they are to need it in the future.
In the unfortunate case where a claim needs to be filed, like with most policies, they would get in touch with their representative and file a claim. After the claim is properly processed, everything should work like clockwork. All bills that are covered should be promptly paid by the company by which they are insured. Whether it's needed for three months, a year, or the life of the loan, the loan repayment insurance will cover those payments. Since coverage is available, a person might want to consider optional coverage on mortgage, charge cards, and all credit card payments; as well. At the time of this writing, however, there is no insurance available to cover household utility bills.
Financial decisions are not always cut and dry. A good budget with a plan for contingencies is one of those things most people want, yet they don't always follow through on doing. Some Christian people have the luxury of an emergency fund. Some have investments, stocks and bonds, and even Government Series E bonds. Lacking any of those items the purchase of loan repayment insurance is certainly a good contingency option. Actually, a good rule of thumb is to be able to live off of 70% of income. The other 30 percent is then available for investments and charity. Those investments could be CD's, stocks, bonds, or even equity into a start-up company. The charity could be a tithe at church, what is lent to a family member (which may never be paid back), or what is donated to fundraisers. It really makes since to put these contingencies into a family budget. Good cash flow management at the individual level is just like everything else. The more you practice, the better you get. Having this type of plan allows a person to be able to retain their standard of living, forego some financial risk, and protect their family assets.