Home Loan Insurance to Cover Loan Liability

Now a day, buying a home became a costly affair. Although, hike in Salaries, dual income power, promising job prediction are empowering numerous youngsters and newly married couples to acquire their first home. Home buyers, especially Indians who acquired the hefty home loans to fulfill their dreams are agonize about the antagonistic effect of the home loans. In case of untimely death of home loan borrower during the loan term, there will be dreadful impact on financing company and home loan borrower’s family members as they need to repay the loan amount.  To be rescued from this issue there is an idea called “Home loan insurance”, which mitigates the risk.

Home Loan Insurance:

Home Loan Insurance is a plan/policy that covers your amateur loan liability in case of your sudden death; the proceeds of home loan insurance are used to repay the unpaid loan to reduce your family’s burden. This insurance is also known as mortgage redemption plans. These days, home loan insurance plans are available with added features and some variations.

This term plan usually offers an amount that reduces annually as an outstanding home loan amount. Due to the tie-ups with various insurance companies most lenders will proffer this insurance policy/plan with a home loan. The Home loan insurance plan has fixed benefits. The contender gets the full amount; it doesn’t matter at which point the term claimed the amount. The remaining money will be handover to the borrower’s family.

How Home Loan Insurance works:

Generally, this home loan insurance India is offered by numerous insurance agencies. This can be achieved by making a single premium or multiple premium payment which is distributed over the tenure of the loan. The assured amount for the insurance plan is same as the mortgage amount.

The best feature of this insurance plan is that the premium is ascertained on the basis of due home loan amount to be paid. Consequently, if the outstanding amount goes down the premium amount also decreases.

On the other hand, you should keep in mind that the plan is a third party member. To gain a commission, the banks might try to advance insurance with their tie ups as a matter of procedure and they won’t provide an alternative to recompense the premium separately. This will enhance your EMI.

This home loan insurance plan is same as life insurance; the distinction is that on behalf of nominee the insurer will shell out the term money to close up the home loan sum. In a term cover, the lump-sum will be renounce to the nominee family member or legal heir.

Benefits:

If the borrower obtains home loan insurance, it ensures that the insurer pays the remaining amount in case of borrowers’ absence. At higher premium, few insurance companies claim outstanding amount in case of disability and severe illness.

Experts suggest that the individuals who plan to cover their liability through home loan insurance can buy a single premium term plan as the annual renewal will cost higher than other protection plans.

Age limit:

Generally, the insurance companies offer a cover amount till the age of 60-65 years. The term premium increases with age.

Premiums depend on:

The Home loan Insurance premium depends on your age, tenure, loan amount and health condition. If you are below 40 with good health condition then the premiums will be normal. Suppose, if the insurer predicts that your life is at risk, then the premiums will be higher, this may vary from every insurance agency. They also check your past family history as well.

Paying regular premium installments with home loan EMI is troublesome as it increases the outflow of money. By choosing a right insurance, own a home which is your lifetime goal.