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Owning a home is a cherished financial dream for many. However, making it a reality requires careful planning, saving, securing a home loan, and ensuring regular EMI payments. But what happens if an unforeseen tragedy or medical emergency occurs?
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This could jeopardize the loan repayment and your family’s financial stability.
While buying home loan insurance is not mandatory, opting for a term insurance plan for home loan protection is highly advisable. Here’s why home loan term insurance works:
Term Plans
Here is a list of 3 reasons for choosing the right home loan term insurance:
A term insurance plan ensures that, in your absence, your family receives a lump sum amount. This can be used to pay off the remaining loan and safeguard the home from being sold or repossessed.
It’s recommended to choose a term insurance sum assured that equals 10 times your annual income plus the loan amount.
Example:
Annual Income: ₹8 lakhs
Home Loan Amount: ₹40 lakhs
Ideal Term Cover: ₹8 lakhs × 10 + ₹40 lakhs = ₹1.2 crore
Term insurance is more cost-effective compared to a home loan protection plan. Plus, you can choose plans online to avail of discounts and compare options from top providers like HDFC Home Loan and SBI Home Loan Calculator for the best rates.
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During the time of securing a home loan, the loan provider might insist that you avail of term insurance for home loan protection to safeguard the family, where the insurance companies will settle any outstanding amount owed to the lender. Since this is not mandatory, you can opt for a term insurance policy instead, which works out to be far more beneficial than a home loan protection plan. Furthermore, you can compare different term plans and purchase one at a premium that is affordable to you. Also, if the policyholder had to opt for an online term plan, they would be able to avail of further discounts.
*Note: Familiarize yourself with what is term insurance before making any decisions to buy term plan.
When it comes to a term plan for a home loan, you can easily shift your current home loan from one lender to another without having to forgo the insurance premium. Furthermore, even after you have completed payment of the loan, you and your loved ones can still avail of the life cover provided by term insurance by paying the premiums, or you can opt out of the same if you prefer.
*Note: Calculate the premium for the term plan of your choice with the help of the term insurance calculator.
A major advantage provided by term insurance for home loan protection is that the nominee receives the full amount no matter at what point the claim is made. The amount can then be used to pay off the lender of the home loan, and the remaining amount can be retained by the nominee.
*Note: Term insurance benefits play a crucial role in allowing individuals to buy term plan, thereby ensuring the protection of their loved ones.
When it comes to a term plan, not only does the amount cover the outstanding home loan – other financial needs of the borrower’s family can also be tended to with the balance amount in the event of the borrower’s untimely death. The sum assured remains constant, and it provides more flexibility to the policyholder, as it isn’t fixed solely to the housing loan secured. If one has to instead opt for a home loan protection plan, the insurance offered progressively reduces in amount as the loan gets repaid. Thus, when the time comes to make a claim, the nominee receives the outstanding loan amount. This is why term insurance for home loan is a better option.
Sometimes, the bank itself might provide you with a term insurance plan. The insurance premium offered by the bank might be higher in comparison to other standalone insurance providers, as insurance is a third-party product and banks would have to purchase them on behalf of the policyholder. This implies that commissions would also be involved. It is thus advisable that home loan owners compare the price for term insurance offered by banks with the premiums available online.
*Note: Take active steps to protect your loved ones from life's uncertainties by selecting the best term insurance plan for 1 crore .
Protecting your family against the loans/debts is the main purpose of your home loan that is linked with the term insurance for home loan. Though home loans companies also provide home loan protection policies bundled with the home loan, purchasing a sufficient amount of term plan has various benefits over a home loan protection plan.
Principally, as we have discussed above, the sum assured amount for your term insurance for home loans should be equivalent to ten times your annualized income along with the outstanding sum of the home loan.
For example, if your yearly income is Rs. 7 lacs and the outstanding loan is Rs. 30 lacs, then your ideal SA amount should be 1 Crore i.e., 7 lacs X 10 = 70 Lacs + 30 Lacs. Thus, a home loan term insurance with a SA of 1 Crore will take care of all financial requirements of your family in case of your absence.
*Note: Don't forget to review and compare the best term life insurance plan in India with Policybazaar's comparison engine to select the most suitable option.
Home Loan Calculator helps you determine the amount of premium (EMI) you will incur when you buy a home loan insurance plan. This online tool requires various details related to your home in order to determine the correct estimate of a home loan. While home loans help you in the funding of your house, a home loan term insurance plan provides you coverage against unfortunate events that can cause damage to your house.
There are a number of benefits of using a Term Insurance for Home Loan Premium Calculator:
Comparison of Multiple Term Insurance for Home Loan
Helps in planning future finances
Convenient and Hassle-free
Saves a lot of time
Error-free calculations
You can calculate term insurance premiums using term insurance calculator .
Home Loan Calculator: Helps you estimate your loan requirements.
Home Loan EMI Calculator: Calculates your EMI based on interest rates like those from HDFC Home Loan or SBI Home Loan Interest Rate.
Term Insurance Calculator: Assists in determining the right premium for the desired sum assured.
A home loan term insurance plan is a vital financial tool that provides peace of mind. It ensures your family can repay the loan and retain your home in your absence. Use tools like the SBI Home Loan Calculator or HDFC Home Loan Login to compare and select the best term insurance plan for your needs.
Protect your dream home and your family’s future with the right term insurance today!
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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