Why You Should Consider Loan Protection

By Sam Calautti
National Manager – Field Sales
Yamaha Financial Services

I spend a lot of time on long-distance solo motorcycle rides, ATV mud runs with friends and pulling my kids on a tube behind my WaveRunner. Many say these machines are a want, not a need, but I cannot imagine my life without the moments and memories they create. That’s why you should consider loan protection on large, financed purchases.

Of course, most of us don’t want to think about how we would sustain our lifestyle if something happened to our income. Hopefully – and likely – nothing will. But what if you got sick or injured and could not work? What if you lost your job? It’s important to at least pause to consider and discuss how to insulate from uncertainty, ensuring you are best equipped to weather the storm should the unforeseen happen.

This is where loan protection (or debt mitigation) comes into play. It helps put safeguards in place to protect your debt in the event of a change in life circumstance. Some may have an emergency fund or job loss benefits through their employer, but would it be enough?

Say you work in an industry that is at high risk for injury like energy, a factory or a skilled trade. Most larger organizations would have some sort of disability coverage as a benefit. Common workplace benefits cover 60 to 80% of gross monthly income with a cap of $100,000 gross annual income.

If you earned $100,000 per year and were forced to go on disability due to a workplace injury or sickness, here’s what it would look like:

There is a significant gap between the income you earn while working compared to what you will receive while on workplace benefits. In times of economic uncertainty, it’s particularly important to consider how to protect yourself when making large financial commitments.

Loan protection products help by covering loan payments in the event you are unable to pay due to an accident, serious illness, disability or loss of employment. There are often varying levels of protection available at affordable price points that can be bundled into your monthly payment when you negotiate your loan.

So, take time to review and discuss options available to protect your loan today, which you hopefully won’t need but may be very thankful for tomorrow!