Insured Loan

Published: | Updated: December 21, 2017

Definition - What does Insured Loan mean?

An insured loan is a debt that will be paid by an insurer if the debtor cannot repay it.

In the United States, it is also known as loan protection insurance.

Insuranceopedia explains Insured Loan

An insured loan can pay for credit card purchases, car loans, and other similar financial obligations that can't be met because of sickness, disability, or unemployment. Lending institutions typically recommend this insurance for loan applications.

This type of insurance may not be necessary if the borrower's existing insurance policies already cover the loan. The borrower's disability insurance, for example, may have some of their loans covered.

Because the lender's financial loss is covered by insurance, the interest rate on insured loans are typically lower.

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