At present, most people take the help of loans to buy or build a house. But for such families where there is only one person earning, usually, a home loan lasting 15 to 20 years for those families is not less than any burden. Because the tension of paying the home loan EMI increases when that person loses his job suffers from a serious illness and dies in an accident. In such a situation, home loan insurance proves to be helpful. Home loan insurance is also commonly called a home loan protection plan. Today we are telling you about home loans.
होम लोन इंश्योरेंस लेने के फायदे क्या हैं ?
- If the borrower dies, the rest of the installment gets deposited through this insurance and your house remains safe.
- Having insurance cover does not pass this burden on others. Sometimes banks also merge the premium amount of the insurance into the EMI, yet this does not increase the EMI much.
- Home loan insurance provides cover in case of accidental death or permanent total disability of the borrower.
- Home loan protection scheme is like a term insurance, i.e. you can decide the term of the insurance yourself. Your premium is decided according to the term of the insurance.
- Insurance cover is also available in case of critical illness of the borrower. For some reason, the person taking the loan loses his job, then the insurance company pays three monthly installments.
Is it mandatory to take it?
Be it the Reserve Bank of India or the insurance regulator IRDA, no one has made any such rule that it is necessary to take insurance with a home loan. However, many banks or finance providers have started telling the amount of such insurance to the customers only by adding it to the loan. Despite this, the decision of whether to buy an insurance plan with a loan or not is entirely up to the customer. The borrower cannot be forced to buy the cover.
What is the difference between home insurance and home loan insurance?
It is very important to understand the difference between home insurance and home loan insurance. Home insurance provides cover against damages caused by theft, natural calamities, etc. to the house and its contents.
On the other hand, if something happens to the person taking the home loan due to any reason, then home loan insurance helps in paying the EMI. However, one should read the terms of the insurance policy carefully before availing of insurance against a home loan.
Where can I get loan insurance?
The bank or non-banking financial company (NEFC) from which you take a loan also provides you home loan insurance. Apart from this, if you do not want to take insurance from there, then you can also take home loan insurance from insurance companies.
How much is the premium to be paid?
Insurance premiums range from 2 to 3 percent of the total loan amount. Insurance companies decide the insurance premium based on the loan amount, tenure of the loan, age, and income of the borrower.
How much will the EMI increase if you take a loan as well as insurance from a bank?
Such insurance policies usually have a single premium option instead of the regular annual payment. Suppose your banker sanctions a home loan of Rs 22 lakh to you and provides a home loan cover for 20 years at a single premium of Rs 90,000, then your total loan becomes Rs 22.90 lakh. If the interest rate is 10 percent per annum, then your EMI will be Rs 20,169.
Whereas if you have insurance cover If not taken, your loan would have been only Rs 22 lakh, and EMI for 20 years would have been Rs 19,300. In this way, your EMI will be reduced by Rs.869 per month for twenty years. This means that if you take home loan insurance, you have to pay an additional Rs 208,560 for the entire tenure of the loan, as against the bank’s only Rs 90,000. He is also getting interested in this amount.
Which is better between single and annual premium?
A single premium paying policy has two advantages and one disadvantage. The first advantage is that you do not have to worry about the renewal date because there is no renewal in it. Another advantage is that such products are cheaper as the commission is limited to 2%, the insurance company gets a better return on investment and there are fewer service charges.
single premium policy The disadvantage of this is that the lump sum amount that has to be paid upfront is quite large. Suppose a 40-year-old person takes a 30-year insurance policy for a sum assured of Rs 1 crore. For this, the single premium will be Rs 3.3 lakh and the annual regular premium will be Rs 23,000.
Most people prefer to pay a premium of Rs 23,000 per annum, even though it will cost Rs 6.9 lakh in 30 years. Because paying an annual premium is right out of pocket and people have the option to discontinue it if it is not needed in the future.
When will you not get the benefit of insurance?
If you shift the home loan to someone else or close it prematurely, the insurance cover ends. Cases of natural death or suicide are also not covered under the home loan protection plan. However, if you transfer, prepay or restructure the loan to another bank, the home loan insurance is not affected.