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Read all about education loan insurance. Understand the importance, process, benefits, fees, and other important details of taking an education loan insurance.
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Education loan applications have witnessed a 17% surge in the past five years. Taking an education loan is a smart decision for several reasons. It provides protection against rising education expenses due to factors like inflation, currency fluctuations, and exchange rate variations. Additionally, education loans can help offset the impact of TCS (Tax Collection at Source) rates on payments made abroad, which attracts a 0.5% charge beyond Rs 7 lakh. Moreover, they offer potential tax benefits, leading to long-term cost savings.
These factors highlight the growing trend of students opting for education loans to finance their study abroad endeavors. It's important to acknowledge the associated insurance component and delve deeper into understanding its significance.
Education loan scheme is a type of insurance specifically designed to provide financial protection to borrowers who have taken an education loan. It acts as a safety net in case the borrower is unable to repay the loan due to unforeseen circumstances. Education loan insurance typically covers the outstanding loan amount, ensuring that the burden does not fall on the borrower's family or co-applicant. In the event of a covered contingency, the insurance policy provides the necessary funds to repay the loan, relieving the borrower and their loved ones from the financial obligation.
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Several education loan insurance benefits are:
Education loan insurance typically provides coverage for various aspects related to the education loan but this may differ from policy to policy and depending on the lender that you choose. Here are some common elements that may be covered in education loan insurance:
Get the Funds you need to Study Abroad
One of the greatest advantages of education loan insurance is that it seamlessly integrates into the loan application process. Most lenders offer the option to opt-in for education loan insurance, saving you valuable time and effort. By choosing this option, you eliminate the need to go through a separate application process, gather additional documents, or worry about meeting eligibility criteria. Since the lender already has your necessary documents, it streamlines the entire process and ensures a hassle-free experience for you.
The decision to purchase education loan insurance for abroad education loans varies among lenders. In the case of government banks, it is not mandatory to buy education loan insurance alongside the study abroad loan. Most government banks that provide education loan leave it to their applicants to decide whether to purchase loan insurance under any of the education loan schemes offered by them.
When it comes to NBFCs and private banks offering abroad education loans without collateral, the purchase of education loan insurance is compulsory for all applicants. This requirement is applicable to every student seeking an education loan without collateral. The reason behind this mandatory insurance is that these institutions do not require students to provide any collateral security for their study loans. Therefore, if you are planning to finance your higher education through an unsecured education loan, acquiring education loan insurance becomes a necessary step to fulfill.
An overview of loan insurance fees from different lenders can be seen below -
Lets, 's now understand these fees in detail with the help of points mentioned.
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After students finalize their decision to buy education loan insurance, the next thing on their minds is whether there would be an immediate requirement for loan insurance fees from the lenders. Well, here’s the good part.
When it comes to navigating the complexities of education loans and insurance for your study abroad plans, GyanDhan is here to assist you. With numerous lenders and policies to consider, it can be challenging to keep track of all the options available. GyanDhan simplifies the process by doing the legwork for you. We provide expert guidance and present you with the best education loan options tailored to your needs. Additionally, we offer recommendations on education loan insurance, ensuring that you have comprehensive coverage for your financial security. Check your eligibility with GyanDhan and take the first step towards your study abroad aspirations with confidence.
Read more about:
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- Expenses covered under education loan
- Abroad Education Loan without Parental Income
- Study Abroad Scholarships for Indian Students
- SBI abroad education loan
- Abroad Education loan interest rate
Education loan insurance varies among lenders. Government banks don't mandate it, while NBFCs and private banks offering unsecured study-abroad loans require it. It protects students without collateral security.
Depending on your profile and creditworthiness, HDFC Credilla can charge anywhere between 2% - 5% of the loan amount as education loan insurance.
Typically, the premium is 1% of the loan amount, although you can use the SBI Life Rinn Raksha Policy Premium Calculator to get a clearer picture. You get an additional 0.50% discount on your education loan rate of interest.
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