Home Loan Insurance : A great relief for our loved ones
As a home loan is a huge financial commitment for anyone, so many of us are concerned about the plight of our dependents in case anything happens to us. How would the family be able to make large EMI payments in case of death of the breadwinner? Saddled with the burden of debt, they might be forced to sell the house, in that case home loan insurance lends the borrower peace of mind and assured financial comfort for his loved ones.
The basic purpose of this product is to provide your family the support of insurance cover to repay the outstanding on the home loan. The family is not burdened by EMIs for the borrowed money. In case, the borrower opts for the insurance cover from the same bank, both the premium and EMI amount are clubbed together. This makes the entire insurance process and future transactions easier for the homeowner.
Sometimes the option of a term insurance is more appealing. The home loan amount can be construed as the fixed sum assured. In case misfortune befalls the breadwinner, the fixed sum assured is returned to the family. They can clear the home loan debt with this sum and keep the rest of the money with them. On the contrary, most home loan insurance products are based on reducing outstanding loan amount. As time elapses, the debt on home also comes down. The insurer will only disburse the outstanding loan amount.
In case of rising interest rates, the tenure of the loan also increases. One has to read the terms and ensure the insurance takes care of increases in tenure owing to rate fluctuations. What would happen to the cover of insurance in case you switch a lender? How would the disbursement be made to the bereaved family and what would be the amount? Is a term insurance a better option for you rather than a cover based on reducing outstanding loan? Home owners must gather all this information and select a policy that suits their family’s financial needs. A policy taken in haste may not meet its required objectives