Everyone has a fear somewhere or the other for the future, especially when it comes to heavy loans like home loans as to what would happen and who would take the responsibility to repay the loan amount if something unexpected happens to the individual in the future. We should always have the idea to protect our home loan.
The individual would certainly not want their family to suffer and burden them for any inconvenience caused to them.
A home loan might go as long as thirty years, and any inconvenience caused by such a long tenure is always a concern for the people.
This is why it is very important to keep this factor in mind to protect our home loan and plan everything accordingly. Also, there is no such compulsion, according to the RBI of the IRDA, to buy home loan insurance plans while applying for a loan from the NBFCs and the banks or any other financing firms.
HOME LOAN INSURANCE:
Home loan insurance or as commonly termed Home loan Protection Plan (HLPP), is one of the most beneficial schemes offered by most of the financial firms where they ensure that the insurer will settle the remaining balance plan with the bank or the borrowing firm in the unseen situations and circumstances which also includes the death of the borrower.
HLPP or Home loan protection plan is basically a type of simple home loan insurance plan.
The policy provided is almost the same as the loan tenure.
By applying for such insurance, the borrower is relieved that even after his demise or any uncertain condition, the responsibility of the home loan would not fall upon any other family member to repay the home loan amount or vacant the house and would be covered by the insurance company.
Beneficial Features of Home Loan Insurance:
- In addition to solving the problem of unforeseen situations, home loan insurance also provides a certain amount that can be further used to repay the balance amount.
- The lump-sum amount is directly paid to the home loan holder or the policyholder.
- Even the laws, under section 80 C and section 80 D, tax benefits and deductions are provided to the borrowers.
- Home loan insurance also provides an additional benefit if covering any medical emergency expenses, which includes cancer, heart attack, etc.
- The borrowers also get the flexibility to manage the insurance amount and the home loan amount. They plan to make it on an annual basis or any other adjustment suiting their requirement.
- The insurance also provides an advantage to the people applying for a joint home loan as only a single home loan insurance would cover all the joint borrowers.
However, home loan insurance doesn't cover the repayment plan in cases where the borrower commits suicide or dies due to some natural calamities or war.
Home Loan Insurance Premium Categories:
The three things on which the Home Loan Insurance premiums depend include the age factor and group of the insured or borrower, the loan period or tenure, or the loan amount and the total medical history of the borrower.
An additional benefit that could be counted in the home loan insurance premium is that no other body can confiscate the property or home under the insurance.