Job loss insurance is a type of policy that will make loan payments like a car payment in specific circumstances.
Also known as payment protection insurance, some finance companies offer it when you take out a loan. Payment protection insurance makes loan payments on car loans, mortgages, or other loans if you become unemployed (through no fault of your own) or can’t work due to an accident or illness.
Payment protection is usually added to your loan payment. Not everyone is eligible for it; if you have a long-term illness or are self-employed, you may not qualify.
Some car manufacturers also offer job loss insurance. For example, Hyundai Assurance job loss protection provides three months of deferred payments and up to six months of payment relief to new car buyers.
It’s important to read the fine print before purchasing any sort of job loss insurance. There are often a lot of terms and exclusions, and the coverage only applies in specific circumstances. In many cases, it’s better to put money away in savings to be prepared for a change in employment status.