Skip to main content

Insurance Planning: Cover for Home Loan

 

   Home loan repayments form a substantial chunk of most borrowers' monthly income. Vishal is one of those borrowers who are walking on a tight rope budget. With a high interest personal loan and credit card debt also adding to his burden, Vishal is under stress. He is constantly afraid of losing his job and unsure of meeting medical emergency bills of his family.


   Some insurance products are structured keeping in mind home loan borrowers like Vishal. Some term products cover the sum insured subject to a maximum liability for a time period of say five years for illness, death of insured person etc.


   Most insurance companies compensate for loss of employment on account of retrenchment or layoffs. This is applicable for salaried employees only and the maximum liability of the company is three EMIs. So, the borrower can look for another assignment without worrying about raising money to repay the home loan dues for this time period.


   You can insure your house against damages from fire and other perils. Here, losses to the structure of the house and contents due to natural or man-made calamities are usually covered. Fire, earthquake, lightning, flood etc may be covered. On the contrary, there are exclusions to the cover that all borrowers must be aware of. They could include willful destruction of property, and wear and tear. Loss of valuables due to burglary is also covered under some products.


   Read the elements covered, and understand the limitations and exclusions of the policy. Compare products offered by different companies and settle for the one that suits your specific requirements.


   Self-employed people may not be eligible for cover against loss of employment. One is required to provide accurate details of his health condition. Usually, if a borrower has a pre-existing health condition, it will be excluded from the cover. Most products are usually given to individuals above 20 years and below 50 years of age.


   The premium charged depends on the age of the applicant, loan amount, loan tenure, occupation, medical history and sum insured.


   Home insurance policy covers the structure and contents of your home from natural and man-made calamities. Assess your insurance needs first.


   It is prudent for home loan borrowers like Vishal to start working on a contingency fund. Too many debts can push a borrower into a deep financial crisis. A contingency fund can be of extreme value in case of medical emergency or loss of job. Even if it is small money, start setting aside this amount month after month.

 

Popular posts from this blog

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...

About CRISIL IPO Grading

CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, or a comm...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now