Adequate Life Cover : Home Loan Insurance..!

Anyone has adequate life cover (Nearly 150 times of his monthly income.(example).
If any monthly salary is Rs.20,000 , life cover should be for Rs. 30 lakhs) then he/she can take a separate housing loan insurance.

In case, he/she already has adequate life cover then he/she can take a housing loan insurance with the Sum Assured depreciating in line with the outstanding loan amount.
This means, in this case the initial Sum Assured will be Rs. 25 lakhs, but as the loan outstanding decreases the Sum Assured in the policy also gets reduced accordingly.
In the event of uncertainty, an amount equal to the outstanding home loan amount will be paid by the policy to settle the loan.

In such a policy the premium payable is calculated based on the Sum Assured which keeps reducing and this premium will be lower than the premium of a term plan in which Rs.25 lacs will be the Sum Assured all along the tenure of the policy.

In case he does not have adequate life insurance cover, he / she can take a term plan for 


Rs. 25 lacs or if possible even more, as at the event of uncertainty , the nominee would get the entire Sum Assured, which the applicant opted for initially.

So, in this case the nominee would have an amount which the difference of the Sum Assured & outstanding loan amount left with him/her after settling the loan which the nominee can keep for the future financial needs.

In short, one should not think about Life Insurance (life cover) only when he / she takes a housing loan / car loan, instead one should have adequate life cover to protect his/her family in the event of uncertainty, regardless of he/she having or / not having a loan.


The above example Monthly salary Rs. 20,000. Life insurance coverage should be for Rs. 30 lakhs. The personal taken a home loan about Rs. 25 lakhs. Then the person will take a total life cover Rs. 55 lakh. The policy would be term plan is better. 
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