Prajna Capital - An Investment Guide

Some forms of home loan insurance available for borrowers With the changing times and increasing competition, banks have come out with new and innovative schemes. This has been further boosted by the upsurge of insurance companies in the private sector. They provide an important solution - security of repayment of loan in case of untimely demise of the borrower. Many people are a bit reluctant to go in for housing loans because of the risks involved. The risk of not being able to repay the loan, because of some unforseen event, deters them. The loan amounts are large. The loan tenures are long too - 10 to 20 years. Uncertainties in life tend to affect the decision. It makes sense to pay a little extra and be secure of the unforseen risks in the future. Many new products are entering the market. Innovative home loan insurance schemes have been devised. These offer a wide variety of options to protect the home loan. Many products are flexible and can be tailored to meet the req...

IT sounds the same, you might say, but there's a difference between home insurance and home loan insurance . The difference When you opt for home loan insurance , you will be insuring the home loan and not your home. That is, God forbid, if something were to happen to you (borrower), home loan insurance will take care of repaying the remainder of the loan to the bank. So, the burden of paying off the loan will not fall on the shoulders of the surviving family members. It will also prevent a situation where the home may need to be given up to the bank to help loan recovery. For instance - One takes a home loan worth Rs 30 lakh for 20-year loan tenure. He/She also takes an insurance cover for this loan. On the 18th year of his loan, Insured meets with an untimely death. The insurance company will pay the remainder of the principal, approximately Rs 9 lakh, to the bank. Thus foreclosing the loan. What’s my premium? Premium for this insurance cover varies for different insurance compa...