When it comes to real estate, Indians believe it to be the most rational, safe and secure class of assets. However, owing to the escalating realty prices in almost every city, investing in it has become costly, challenging and risky affair. Considering the situation, several people yearning to have their own home, are forced to shelve their decision or opt for financed capital purchases. Though the stable job market conditions and salary hikes have enabled many dual income families to secure high-value home loans and fulfil their dreams, many homebuyers are still weighed down by higher EMIs.
Repaying home loan often affects the overall financial standing of a borrower. If the bread earner of the family becomes a victim of any life-threatening event, the family’s financial plan does awry and they have to deal with an additional debt. Rakesh, a proud owner of a lavish apartment in Mumbai, lives happily with his family. However, not many people are aware of the fact that Rakesh is having sleepless nights over his 25 year home loan worth Rs. 80 Lakh that is haunting him day and night. He fears how his family would service the home loan in case any untoward event claimed his life.
Long and regular defaults in EMIs might empower the lender to take possession of the apartment, thereby forcing the family out. What is the solution? To evade such intimidating situations and safeguard the family from such trouble, home financiers advise borrowers to apply for a home loan insurance cover. Life insurers, and even some general insurance companies offer home loan protection plans for borrowers who might find themselves in such a quandary. In case of the misfortunate death of the sole earner, the insurance proceeds are used for repaying the outstanding loan, thereby easing the financial burden of the family.
What is Home Loan Insurance?
To put it simply, it is a unique insurance policy that covers the outstanding liability pertaining to a home loan. If the borrower dies, the assured amount is channelled towards reducing the debt burden on the family. These days, due to the ever-increasing popularity, more varieties of home loan insurance plans are offered by various providers, having unique add-on features. Some high-value plans even provide critical illness medical cover apart from covering the home and the included assets.
How to get it?
Several insurance providers have teamed up with leading banks and financiers to offer home loan cover to borrowers. This saves the interested borrowers from the hassle of scouting for the perfect insurance policy. For instance, HSBC Bank has joined hands with Tata AIG Life Insurance Company, Union Bank with SBI Life and IDBI Bank with Birla Sun Life Insurance Ltd for offering the required products and services. This makes it easy for the borrowers to secure an ideal cover along with acquiring the required amount of home loan from the bank. One can have the application submitted through the bank or apply directly with the respective home insurance company for obtaining the policy.
Having is loan insurance is far more important than obtaining a normal home loan cover. While home insurance only protects the assets from any kind of damage, home loan insurance covers any kind of anomalies that arise in the path of servicing the EMIs in case the sole earner of the family dies. When searching for an ideal loan insurance policy, there are certain factors that one must take into consideration.
- Age and Term – Normally, insurance providers offer a home loan insurance cover to borrowers below the age of 60-65 years at the end of the loan tenure. The duration of the loan insurance is usually the same as the maximum home loan tenure, which is subject to being altered, depending upon the particular situations or scenarios. One must clarify all the doubts and facts about the applicant’s age and term of the policy before filing an application with the provider.
- Premium – The amount of insurance premium primarily depends upon the age of the insured (the older the borrower is, the higher the premium), the amount of the loan (larger the amount, higher the premium), the home loan tenure (the longer the period, the higher the premium), and the medical record of the borrower (the better the health condition, the lower the premium). One must take all these factors into account before applying for the home loan cover and increase the chances of approval by working in the weaker sections.
- Product Features – Insurance products offered by different providers come with a different set of features. Depending upon the personal needs and wants, one must weigh these features and select the most suitable option.
On the face of it, a home loan insurance cover might appear to be an added expenditure. However, as a smart borrower, one should opt for a loan cover policy to safeguard the asset and the family in the events of his/her death.
Facing issues in obtaining insurance cover for a home loan? For a better understanding of the need for home loan insurance and the deals available in the market currently, log in to https://www.bankbazaar.com/home-loan.html.