India Political Blog

What is loan insurance, and why do you need it ?
Loan insurance is an insurance policy meant to cover the risks taken when a person takes a loan for which the principal amount is many times greater than your annual money inflow, and you need to have a backup plan if this source of income stops coming in, and still need to keep repaying the loan. Read more about this type of insurance at this article (link to article):

But what happens if suddenly things take a bad turn ?
- You lose your job
- Or even more horribly, the person gets injured or loses their life
In all such cases, the burden of repaying the loan becomes huge, since the income stream could reduce or vanish. When that happens, the bank or financial institution will want to reclaim their loan or their asset, and the family members will be in a bad position. The asset against which the loan was given could be taken away, or something similar could happen.

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