Owing a property is still believed to be the biggest possession in India. Perhaps, this is the reason why buying a dream home in metropolis is the only thing you’ve always wanted? However, it sounds great while thinking of it but the reality of investing on a house isn’t so easy.
With the burgeoning property prices in most part of the country, many potential buyers either postpone their home buying decision or look for Home Loan Insurances to cover their liability.
Here are Few Things You Need to Know Home Loan Insurance Policies:
✓ What Is Home Loan Insurance Cover?
Home loan insurances in simpler terms are an excellent alternative to cover your loan liabilities and help you protect your monthly loan payments in case you become unemployed or suffer an accident or sickness.
HDFC-ERGO home loan protection insurance will typically be used to cover home loan liabilities, car loan or even sometimes personal loans as well. Under a loan insurance cover, the lump sum amount reduces as the outstanding loan decreases as per the loan schedule.
✓ The Benefits of Home Loan Insurances -
Home Loan Insurances are mainly beneficial in case of death or disability due to an accident or sickness; or In case of loss of job. It saves your family from undergoing financial trauma of paying the loan if any unfortunate event occurs with you.
There are also joint loan insurance plans which will effectively cover you and your partner. Under this plan, both will have the reassurance that if either of you should be faced with unemployment, illness, have an accident or even die; your repayments will be made for you.
✓ What are The Things to Remember While Checking Loan Insurance?
Loan insurance is something that you need to choose wisely. Prior to purchasing, do check;
- What does the loan insurance cover? Whether it covers death by accident or by any cause? Does it cover temporary or a permanent disability or not?
- Check the tenure and the eligibility criteria of the loan
- Check whether you can pay back the premium as part of the EMI or does it have to be made as a lump sum amount
Check if medical check-up is necessary? If yes, then is it necessary for all cases?
✓ Are there any tax benefits?
Yes, Home loan insurances come with tax benefits too. Since you are paying a life insurance premium, you can get deduction under section 80C. But if, it is clubbed with your EMI payment, you will not get the insurance benefit.
✓ Be Cognizant of the Most Commonly Observed Malpractices -
Prior to purchasing any cover, it is wise to be aware of the most commonly observed mal-practices. For instance, several banks and non-banking companies unite with few insurance providers and offer home loan products with home loan insurance plans.
Furthermore, Banks generally promote home loans insurances of companies they are associated with. They may also not provide you an alternative to pay separately for your home loan and include the cost paid towards premium in loan amount which will in turn increase your EMI.
There is a possibility that banks may try to promote products which are inapt to cover such risks. For example, banks may endorse endowment plans which may not provide you adequate cover and would prove to be ineffectual too.
Therefore, it is not always necessary to buy a cover from the insurance company that has tie-up with your investors. Look for your own approaches and choose the plan wisely.