Education loan insurance’s importance Most of you might think that taking out an international education loan to pay for college is a big financial risk. Most students who are thinking about using a study abroad loan to pay for college abroad are worried about how to pay back the loan. Many of them are especially worried about who would have to pay back the loan if something terrible happened. In the process of getting an international education loan, co-applicants are responsible for paying back the loan if something bad happens to the person who took out the loan. Having education loan insurance in place could make things easier for the co-applicants of the person who lost their job.
The next video will help you understand the same idea in a more in-depth way.
Health insurance’s importance / Health insurance?
Most of you might think that taking out an international education loan to pay for college is a big financial risk. Most students who are thinking about using a study abroad loan to pay for college abroad are worried about how to pay back the loan. Many of them are especially worried about who would have to pay back the loan if something terrible happened. In the process of getting an international education loan, co-applicants are responsible for paying back the loan if something bad happens to the person who took out the loan. Having education loan insurance in place could make things easier for the co-applicants of the person who lost their job.
The next video will help you understand the same idea in a more in-depth way.
Most of you might think that taking out an international education loan to pay for college is a big financial risk. Most students who are thinking about using a study abroad loan to pay for college abroad are worried about how to pay back the loan. Many of them are especially worried about who would have to pay back the loan if something terrible happened. In the process of getting an international education loan, co-applicants are responsible for paying back the loan if something bad happens to the person who took out the loan. Having education loan insurance in place could make things easier for the co-applicants of the person who lost their job.
The next video will help you understand the same idea in a more in-depth way.
But have you ever thought about how important loan insurance could be to the whole process of getting a student loan? The goal of this article is to bust some myths about the same.
What is loan insurance, and why is it so important?
It is a well-known fact that most lenders will only accept the loan applicant’s parents as co-applicants for study abroad loans. This is true for both loans with and without security. Buying loan insurance makes sure that if something bad happens, the co-applicants won’t have to pay back the full amount of the loan plus interest. Borrowers of government bank education loans, for which even retired parents can be named as co-applicants, may find this to be a big relief.
If the person applying for the loan has a tragedy while in college that could likely lead to a fatal illness, the insurance company will pay the full amount of the education loan instead of the co-applicants.
Is it required to get insurance for a student loan?
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Different lenders need different amounts of education loan insurance. In order to get a study abroad loan from a government bank, it is not necessary to take out education loan insurance as well. As part of their education loan programs, most government banks let applicants choose whether or not to get loan insurance.
It’s important to note that students who apply for secured education loans from government banks are not required to get education loan insurance if they don’t want to.
When it comes to international education loans from NBFCs and private banks, everyone who wants an unsecured loan must get education loan insurance. This is a requirement that every student who wants to get a loan here must meet. The main reason that NBFCs require students to buy loan insurance is because none of them ask students to put up collateral in exchange for a loan to study abroad. So, if you want to pay for your college education with an education loan that doesn’t require collateral, you will have to buy education loan insurance.
Let’s talk more about how much an education loan insurance plan costs all together.
If your loan officer has told you something different, ask the WeMakeScholars Financial team to call you back today.
How much do banks charge for loan insurance?
How Much Amount Do Lenders Charge as Loan Insurance Fee?
Government banks and private lenders of abroad study loans charge different loan insurance fees.Government banks generally offer loan insurance schemes provided by their in-house loan insurance lenders. For example, SBI provides abroad study loan insurance through the SBI Rinn Raksha scheme.
| Loan Insurance | Insurance Amount |
| Government Banks | 0.5% to 1% of the entire education loan amount |
| Private Banks | 1.5 percent of the overall loan amount |
| NBFC’s | 2% of the total abroad study loan amount |
If you are still confused about purchasing an education loan insurance or feel that you are being misguided about the same, reach out to our team at the earliest possible instance.
How do you make a payment when you buy loan insurance?
After a student decides to buy education loan insurance, the next thing on their mind is whether or not the lender will ask for the loan insurance fees right away. The fun part is about to start. Candidates do not have to pay for education loan insurance costs on their own. The total amount of loans that students have taken out is used to figure out these costs.
For example, if you asked for an education loan of INR 40 Lakhs and the loan insurance is INR 50,000, then the approved loan amount limit is INR 40.5 Lakhs instead of INR 40 Lakhs. So, students don’t have to worry about where the money will come from to pay for their education loan insurance.
Before getting a study abroad loan insurance policy, all students should know that the loan insurance fees are directly related to the length of the education loan term. The loan insurance fees will be less the shorter the loan term.
How does buying an education loan insurance help you?
When you take out any kind of loan, you take on a lot of financial responsibility. This is especially true when it comes to getting a loan to study abroad. When students apply for an education loan to pay for their studies abroad, the responsibility of paying back the loan falls on their co-applicant/co-borrower until the student becomes financially independent. If the person who took out the loan dies, for example, their co-borrowers have to pay back the whole loan.
Let’s talk about the benefits of the SBI Life Rinn Raksha loan insurance scheme, which is one of these loan insurance plans. Aside from helping people pay back their education loans, the SBI Life Rinn Raksha loan insurance scheme has another hidden benefit. When a student applies for a student loan, if they buy the loan insurance plan, their interest rate is reduced by 0.5%.