In India, buying a property - House is the single largest investment for 90% people.When any one buys a home by availing a housing loan, it creates a big financial liability for the him. The situation becomes acute if one considers that in most cases, the person, who avails the home loan, is also the only earning member of the family.
If unfortunate circumstance this person were to pass away, his dependents would unfortunately inherit a huge financial liability with few means to provide for it. And if the survivors of the person are not in a position to pay the loan, the bank has the right to sell the house and recover its loan.
In light of such unfortunate circumstances, home loan protection insurance is emerging as an important tool to safeguard a family and dependents.
What is home loan protection insurance..? A home loan insurance plan is designed as an insurance policy, where, if the person who has taken the home loan dies or is disabled causing loss of income, the insurance firm will pay the remainder of the home loan.
The borrower were to die or incur a disability leading to loss of salary/income the home loan protection insurance would pay the balance loan amount to the bank/housing finance company.
The amount of payment paid under insurance will be the same as the balance outstanding on the home loan at the time of claim.
A home loan protection plan is similar to term (life) insurance in respect to paying options.
Some of payment options:
# Single premium payment :
A single premium is paid while availing the insurance.
Banks/Housing finance companies will try to club the amount payable towards a single premium with the home loan itself.
# EMI/regular payments or regular payments:
Equated Monthly Installments (EMIs) are payments that can be made at fixed intervals - Monthly/Quarterly/Yearly. In this case too, the EMI to be paid, towards the insurance, is clubbed with the home loan EMI.
# Limited period payment:
An option where the insurance premium is payable only for a limited period of the home loan tenure. It may be 5 years/8 years (In the case of the home loan tenure is 10/15 years)
Other alternative:
other insurance products can also be considered as an alternative to home loan protection insurance. A popular option available today is term insurance. On comparing the cost of a housing loan protection plan with term insurance, any one finds that the cost of insurance, one finds that the cost of both is similar. However, term insurance offers the following benefits over home loan protection insurance:
The cover in a term insurance plan remains constant throughout the tenure of the loan; hence, the survivors will receive a fixed amount in the event of the death of breadwinner rather than a reduced amount. But, premium is more compared to housing loan protection plan.
Also Read
Home loan protection insurance : Bajaj Allianz Life launched Two plans
In light of such unfortunate circumstances, home loan protection insurance is emerging as an important tool to safeguard a family and dependents.
What is home loan protection insurance..? A home loan insurance plan is designed as an insurance policy, where, if the person who has taken the home loan dies or is disabled causing loss of income, the insurance firm will pay the remainder of the home loan.
The borrower were to die or incur a disability leading to loss of salary/income the home loan protection insurance would pay the balance loan amount to the bank/housing finance company.
The amount of payment paid under insurance will be the same as the balance outstanding on the home loan at the time of claim.
A home loan protection plan is similar to term (life) insurance in respect to paying options.
Some of payment options:
# Single premium payment :
A single premium is paid while availing the insurance.
Banks/Housing finance companies will try to club the amount payable towards a single premium with the home loan itself.
# EMI/regular payments or regular payments:
Equated Monthly Installments (EMIs) are payments that can be made at fixed intervals - Monthly/Quarterly/Yearly. In this case too, the EMI to be paid, towards the insurance, is clubbed with the home loan EMI.
# Limited period payment:
An option where the insurance premium is payable only for a limited period of the home loan tenure. It may be 5 years/8 years (In the case of the home loan tenure is 10/15 years)
Other alternative:
other insurance products can also be considered as an alternative to home loan protection insurance. A popular option available today is term insurance. On comparing the cost of a housing loan protection plan with term insurance, any one finds that the cost of insurance, one finds that the cost of both is similar. However, term insurance offers the following benefits over home loan protection insurance:
The cover in a term insurance plan remains constant throughout the tenure of the loan; hence, the survivors will receive a fixed amount in the event of the death of breadwinner rather than a reduced amount. But, premium is more compared to housing loan protection plan.
Also Read
Home loan protection insurance : Bajaj Allianz Life launched Two plans
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