Home Loan insurance is getting popular nowadays. It is not mandatory to take home loan insurance while you are availing a home loan. Sometimes financial institution forces to take home loan insurance but is not that mandatory for opting a home loan. You have to pay an extra insurance premium for home loan insurance. Though home loan insurance offers you great securities and benefits.
What is home loan insurance?
Home Loan is a kind of loan that you can repay within thirty years but the time is so long but in present condition, you don’t know what will happen next and you do not want to give you a financial burden to your family. Home Loan Insurance plans cover your outstanding home loan liability to hedge the risk of loss if she or he dies during the home loan repayment. Every year the cover money reduces as every year your home loan also reduces. Your home loan insurance policy will have lapsed if you transfer your loan to another bank account or if you have completed the Home Loan.
Features and Benefits of Home Loan Insurance
- Home Loan Insurance provider provides you a lump sum amount so you can repay the outstanding home loan.
- Your Home Loan Insurance policy can lapse on complete of repaying the home loan or balance transfer.
- You can get a tax benefit from home loan insurance under section 80C & 80D.
- If you have taken a joint home loan a home loan insurance policy can cover both borrowers.
- If you pay the extra premium you also can cover medical disabilities like disability or critical illness.
- Home Loan Borrower can pay his or her home loan insurance premium on an annual basis.
- Home Loan Insurance premium’s amount can be added with your EMI amount.
Types of Home Loan Insurance
- Level-Cover Plan
The coverage will be the same on the entire loan repayment tenure.
- Hybrid-Cover Plan
The coverage will be full in the first year then after that, it will start to reduce.
- Reducing-Cover Plan
The coverage will reduce with tenure.
You should know the facts about home loan insurance
- Under home loan insurance your home loan is protected but not your home.
- You have to pay the premium price like all other insurance premiums.
- The insurance policy premium price depends on age, amount, tenure and medical record, so if you are someone who is older and the home loan amount is high and the tenure is long, you know what I mean.
- The home loan insurance can be funded by the lender but the loan amount will be high.
- If your lender is paying the EMI behalf on you. You can’t claim the tax deduction.
- The Home Loan insurance Policy is a third party product so the banks or NBFCs get a commission if you set the plan. So there you may have the situation when you don’t need the loan but you have to take it for your borrower.