Definition of Unemployment Protection on a Loan
Unemployment protection is a type of insurance you can purchase when obtaining a mortgage or personal loan. It is activated if you lose your job, allowing you to make loan payments on your behalf so you don’t miss any payment.
How Does Unemployment Protection on a Loan Work?
Unemployment protection, or voluntary unemployment insurance, may be offered on the loan when you first obtain it. It is optional coverage, and you can choose not to take advantage of it. Additionally, the lender cannot add it to your loan without your consent. Credit insurance, including unemployment protection, must be disclosed as part of your loan offer.
Do I Need Unemployment Protection on a Loan?
Some lenders offer credit insurance as part of the loan package. However, they cannot make it a requirement for obtaining the loan. Borrowers who feel undue pressure to select optional credit insurance can complain to their state’s attorney general, state insurance commissioner, or the Federal Trade Commission (FTC).
Source: https://www.thebalancemoney.com/what-is-unemployment-protection-on-a-loan-5090407
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