Housing loan
insurance is a plan that covers a borrowers outstanding loan liability. In case
of his death,the proceeds are used to pay the outstanding loan, thus reducing
the familys burden. These policies
typically offer a cover that reduces every year as the loan amount comes
down. Most lenders offer such policies with home loans due to tie-ups with
insurance providers, but one can buy a plan independently as well.
Application..
The application
should be submitted through the lender or directly to the insurance company,
depending on the borrowers choice.
Age and Term..
Usually, insurance
companies offer a cover under hosuing loan insurance till the age of 60 to 65
years.The insurance is generally offered for the tenure of the loan.
Premium..
The premium depends
on the age and medical record of the borrower, loan amount & the tenure.The
premium can be a single upfront payment or paid as a regular instalment, which
is bunched together with the loan EMI.
Medical Tests..
A medical check-up
may be required depending on the insurance companys policies. Few insurers make
the tests compulsory for borrowers above a certain age limit or / those availing of an insurance cover above a
certain threshold.
Main Points to
Note...
Paying the premium in
instalments will increase the regular outflow of cash due to the EMI payable
towards the housing Loan. The premium is doubled in case of a joint
application.
In the event of the
death of one of the joint applicants,the insurance company will be liable to
make good the loss.
Src: ET
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