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If you're injured or taken ill and cannot work, you'll still be liable to make the monthly loan repayments. Unless you have insurance cover, you'll have no alternative other than to repay out of your savings.
There are two sorts of insurance that you could consider; critical illness insurance and Loan Payment Protection Insurance.
Critical Illness insurance pays out a lump sum if you are diagnosed with one of a long list of serious illnesses. You could use this type of insurance to pay off your loan in the event of you suffering one of these illnesses.
Loan Payment Protection Insurance is different. This insurance pays out a monthly income, whilst you are off work through accident, illness or unemployment caused by redundancy. This money is then used to maintain your loan repayments.
As with all insurance, in order for you to qualify for a payout, certain conditions must be met. These conditions do vary between policies and it is very important that you read these conditions before you decide to buy the insurance. Up to 20% of critical illness claims and up to 40% of payment protection insurance claims are rejected because the claimants circumstances invalidate a claim.
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