Finance Protection/Loan Insurance – My Story

Ok well, it has been a while since I have posted. Things have been a little tough. Since March this year, my health has taken a bit of a dive. I have been hospitalised twice, had my appendix out (just because they were there taking a look) and had things stuck where things ought not to be stuck. Needless to say, my spirits are high, and I am going to come out on top of this.

With my health been as it is, I have really only been able to work 4 hours per day (on doctor’s orders) at most. Though I did push it the other week in an effort to help out my employer and did do my full 7.5hrs per day for a week. I am now back to my 4 hours per day, and start a new diet next week, with another test to go, and then waiting for my results to be compiled.

I am now going to bring the relevance of the title of my post. Finance Protection Insurance.

What is Finance Protection Insurance?

Loan Protection is optional insurance when taking out a loan, which could help pay your loan repayments if you’re unable to work or pay out your loan in the event of death. Depending on the insurer and your loan there may be added extra’s and of course fine print.

Now, I do not like to tell people what to do….well that is a lie, but anyway, if you are going to take out a loan get insurance. It may be the best thing you ever do.

When you are taking out a loan, be it for a house, car, or personal, listen carefully and ask about loan insurance. Get all the details for your policy, and make sure you can find it. Just in case you ever need it.

I am not telling you this for fun and games. This is coming from experience, first hand.

This is why:

I got sick. I had savings. I used my savings. I used my sick leave. I used my annual leave. I applied for sickness allowance. I am waiting on payments. I still have a loan. I have a second loan. The loans still need to be paid. Money is running out…..ARGH!! Now what?

This is where my insurance kicks in. I call my finance company, explain my situation, and they put me through to the finance insurance team. I speak to the most helpful lady, and she talks me through the process, my options, and the paperwork I will need to supply.

Now, this is where I get lucky. My policy which I did not know included this, has two features. Firstly the insurer will cover my repayments up to a total of $12,500 but then they have a second option. Vehicle Hand-back (where they take the car and then auction it). I am like WHAT! I can hand back my vehicle and not pay my loan…what magic is this. It is not exactly like that.

Here is a great example:

At the time of handing back your vehicle, the finance contract payout amount is $27,000. If at auction the car sells for $20,000 and I have no money in arrears. The maximum cover amount I have is $12,500 as shown on my policy schedule. I currently have not been paid a benefit, this is still been processed. So $27,000 – $20,000  = $7,000 The maximum cover amount you selected is $12,500.
This means my Finance protection insurance will cover me for the  $7,000 (Shortfall) which is the remaining benefit to your financier

How is this lucky for me? Well In my previous post I had wanted to reduce my debt. The plan before getting sick was first to buy a smaller car, which I did (with my loving partner), then to sell the bigger car. Reducing my debt and working towards getting debt free. The lucky bit comes in that I was having trouble trying to sell the car, I was struggling to make the repayments on both loans (though I never went into arrears).

The car is still currently with my insurer, awaiting for auction but I am very thankful I had purchased the insurance with my loan. The alternative to not having the insurance would have meant I would need to sell all my liquid assets (shares and other investments) and to then declare bankruptcy. So in the end, my debt has been lowered, been sick has also lowered my net worth having drained my savings, but in the end, my debts are now roughly sitting at -$18,680.48 (previously –$46,645.45). I still intend on wiping out my credit card by paying off the remainder $4,598.90 and after that will be my remaining loan which is with me and my partner for the car we purchased together.

With the burden of the big loan take from my shoulders, and with my maximum hour of work I can now service all of my debts, and still manage to live. I have been stressed about this but now I can relax a little and focus on my health solely without worrying about my money (or lack of).

I will repeat again, I am thankful that I had insurance, and I urge everyone to consider insurance when taking out a loan.

You never know what life will throw at you

My question to anyone who read this, how will you pay for your debts if you get sick? What happens to your debts if you die? (do you intend on leaving your debts for your loved ones?)

Food for thought!

On a good note, my gorgeous partner is set to be moving in with me, and given my health recovering we are set to start saving like crazy for our first home. We are going to eliminate our Credit Card debt, and then save save save! If you are reading this my love, I am so happy and glad for you, your love and your support.

Signing off for tonight
Pat

 

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