The Real Cost Is the Premium Multiplied by the Term

Loan protection — sold as payment protection, credit life, or credit disability — wraps an insurance premium into your monthly payment. The premium is usually quoted as a percentage of the payment itself, so it scales silently with the loan: on a $20,000 loan at 8% over five years the payment is about $406, and a typical 15% payment-protection premium adds roughly $61 a month — more than $3,600 over the term, on a loan of only $20,000. The coverage is often genuine, but the same protection is frequently cheaper through a standalone term life or disability policy, which this calculator lets you price by switching to a custom premium rate.