What is the value of a Credit or Personal Protection Plan?

Mar 07, 2016
Author: Ean Barnard

Beauty lies in the eye of the beholder. It is hard to quantify something when sentiment is involved. The same goes with the value of a Credit or Personal Protection Plan. But, no amount of money can measure up to the knowing that your family is safe and well looked after.

But first, what is a Credit or Personal Protection Plan?

It is basically insurance for your loan. It is an agreement between you and a credit provider for the coverage (or partial coverage) of your loan in the fulfilment of certain preconditions.

These preconditions are incidents that lead to disability, terminal illnesses, retrenchment or any other happenings that will hamper your ability to repay your loan.

This agreement is something that you pay beyond your monthly instalment. This monthly payment will be considerably less than the monthly instalment. These credit or personal protection plans are for more than just personal loans. It is important to research your prospective credit providers to see what credit or personal protection plans they offer.

It is important to know if an option for a credit protection plan exists before you consider loan applications. You don’t want two credit providers with financing in effect only one loan!

But why would you need it though?

If you worry easily, it will help you to sleep at night as a first thought! If you have high levels of debt, it will alleviate the pressure from your family to repay that credit should you struggle to repay it yourself. It‘s an ace in the hole to play when the tables seem to turn on you and you still have an online loan.

Before you think this is a “get out of jail free card” though, be sure to know what incidents are included in the agreement. It could be a nasty surprise to find out - when it’s too late - that for instance, temporary disability, is not included in your Credit or Personal Protection Plan.

It is easy to quantify the amount that will pay out with the fulfilment of a precondition from your Credit or Personal Protection Plan. But it is hard to determine the value it will add to your life.

Price is what you pay, but value is what you receive.

You will have to answer the question for yourself on the value you receive and whether it is worth it. Your sentiment in the end, will determine the value of your Credit or Personal Protection Plan.

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