Buying a house always holds emotional and financial importance for the buyer. With the growth of the real estate sector, it is a worthy investment. The high cost of property requires opting for a home loan with big EMIs. When taking a home loan, your lender will also advise you to protect the loan with insurance cover.
Home loan insurance is a policy that covers the outstanding loan amount. It has dual benefits for the lender and the borrower's family. If the borrower fails to repay the loan due to death, the family need not worry about repayment and the lender gets his funds back under this cover. With every passing year of loan repayment, the insurance cover reduces.
The bank providing the home loan may offer a standard insurance policy, but you can opt for an independent plan that suits your requirements better. Insurance companies offer various schemes for home loans. By paying an additional premium, you can avail some unique features, like coverage for critical illnesses, disability, and for accessories inside the home.
Read the terms thoroughly
Believing the lender, you agree to buy the insurance without reading and understanding the terms and conditions. When the need arises, the conditions in the fine print may come as a surprise. Some policies cover you for death due to certain illnesses only. If the reason of death is not on this list, your loan will not be repaid.
Be cautious of unfair practices
As with any other insurance policy, be careful while choosing an insurance provider and a policy. Research thoroughly. You are not bound to opt for a policy or insurer suggested by your lending bank. You can choose any policy with a pocket-friendly premium and from an insurer you trust. Many malpractices occur in home loan insurances as well to save the insurance amount payout. Therefore, it is advisable to follow every rule and term in the policy document for your benefit, even if it requires a health check-up.
Home loan insurance plans are generally single-premium policies. You can choose to pay the single premium as a part of your EMIs. However, as per your convenience, you may opt for a regular premium payment or limited premium payment.
Feel free to ask
Buying home loan insurance is not mandatory, but it is important. You have the right to reject the policy and the right to ask questions. If you are not satisfied with the policy offered to you, ask for a detailed explanation from the officer. In case you have bought the policy and do not find it suitable after reading the policy document, return it within the free-look period of 15 days.
Ultimately, home loan insurance is a financial investment. You must take all the necessary precautions while finding a suitable cover for your home loan.
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