Studying abroad for a Master’s or Bachelor's degree is partly fun and partly a major responsibility. Students must make sure to fulfill the demands of their course, get an internship or part-time work experience, and find the time to explore and enjoy their time in their desired study destination. Overseas education loans, which many students use to finance their study abroad dreams, are much the same. While they are an easy option to pay for the tuition fees, living expenses, and other costs of studying abroad, they are also a financial responsibility to consider until repaid.

It is natural for students to have concerns in mind when applying for an overseas education loan. Not only about the interest rates, repayment tenures, and other features of various loan schemes, but also about the repayment. What happens if the student is unable to make repayments for some reason? Well, this is where loan insurance comes into play. Let us learn how insurance for education loans for international students is helpful in their financial journey ahead.

Understanding Insurance for Education Loans for International Students

Overseas education loan insurance is a way of financially securing oneself from the worst-case scenario. Most lenders recommend insurance for education loans for international students, as it serves as a safety net for unforeseen circumstances like illness, accidents, or death. This keeps the burden of the remaining loan amount from falling instantly on the student’s co-applicants, who are generally close relatives or guardians. There is no knowing what tomorrow brings, and loan insurance is a way to be prepared if tomorrow brings the worst. 
In the case of secured education loans, the asset pledged as property must be insured properly. However, for unsecured education loans, most lenders insist on loan insurance as non-negotiable. Usually, there is a fee for insurance for education loans for international student, which depends on the interest rate and loan tenure. This is a one-time payment that comes to around 1-2% of the sanctioned loan amount. 

Without insurance for their student loan for studying abroad, the student or their co-borrower may have to pay for an unforeseen circumstance out of pocket. In the next section, we will outline some ways in which loan insurance for overseas education loans can be helpful.

Compelling Reasons to Get Insurance for Education Loans for International Students

The major reason that students are encouraged to get insurance for their overseas education loans is to protect themselves and their family or guardians from an unexpected financial burden during a difficult or uncertain time. 
The insurance can cover the outstanding loan amount, help the applicant and co-applicants avoid legal issues, and keep their credit score intact. Let us understand some other reasons to keep insurance for education loans for international students in the back pocket.

1. Coverage for Unexpected Expenses

They say that one must expect the unexpected, and overseas education loan insurance is a way to do just that. Insurance doesn’t just cover drastic personal events, but also events out of the student’s control that make them unable to complete their education, like natural disasters, political unrest, or even a global pandemic. 
Insurance covers the expenditure needed for the student to get home for the time being or for good, depending on the circumstances. This allows students to focus on planning to continue their education and invest in their career despite the unexpected turn of events.

2. Financial Security

Insurance for educational loans for international students acts as income protection in case of illness, injury, or other accidents on the job. The insurance covers the loan payments so that students or their co-applicants maintain a healthy credit score and deal with the long-term consequences of unforeseen circumstances.
Some lenders also provide temporary insurance in case the student simply loses their job and is unable to make the loan repayment, although this is not the case everywhere. It is important to understand the extent of what the insurance covers before finalizing the loan.

3.    Hassle-Free Premiums

The premium one pays for insurance on their overseas education loan is generally quite affordable and can even be added to the total loan amount as per the lender’s terms and services. The insurance premium is based on the sanctioned loan amount and duration, so students can plan their budget accordingly. 

Additionally, lenders may offer discounts or tax exemptions for education loans for international students with insurance, which may help students maintain a timely repayment schedule. 

In closing, insurance is a crucial part of the foreign education loan process as it becomes a shield for an uncertain future. Students can contact the best overseas education loan consultants nearby to understand loan insurance in further depth and get their help to determine the best lender, loan type, and scheme for their studies abroad.