Have you also taken a home loan?
If yes, have you thought about home loan insurance?
Home loan insurance is a protection cover that can be very beneficial for you and your family.
In this article, we will tell you what home loan insurance is, how it works, and what are its benefits.
What is home loan insurance?
Home loan insurance is an insurance plan that provides protection for the home loan you take.
When you take a home loan, the bank gives you the option to buy home loan insurance.
This insurance provides financial protection to you and your family in the following situations:
Death of the borrower: If the borrower dies, the outstanding loan amount is paid by home loan insurance.
Critical Illness: If the borrower suffers from a critical illness and becomes unable to work, the outstanding loan amount can be paid through home loan insurance.
Job Loss: If the borrower loses his job and becomes unable to repay the loan, the outstanding loan amount can be covered by home loan insurance for a period of time.
How does home loan insurance work?
When you buy home loan insurance, you pay a fixed premium to the insurance company.
In exchange for this premium, the insurance company is responsible for paying the outstanding loan amount in the situations mentioned above.
If the borrower dies, the insurance company pays the outstanding loan amount to the bank.
After this, the bank releases the mortgage of the loan.
Benefits of home loan insurance
Home loan insurance has many benefits, including:
Financial Security: It provides financial security to you and your family in case you are unable to repay the loan.
Peace of mind: This gives you peace of mind, knowing that your loan will be repaid even if you cannot do anything.
Tax Benefits: You can avail tax benefits on the premium paid on home loan insurance.
Asset protection: This protects your assets from being seized by the bank.
How expensive is home loan insurance?
The premium for home loan insurance depends on several factors, such as:
Loan amount: Higher the loan amount, higher will be the premium.
Loan tenure: The longer the loan tenure, the higher the premium.
Age of the borrower: The older the age of the borrower, the higher will be the premium.
Health of the borrower: The premium may be higher if the health of the borrower is poor.
