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Term insurance for home loan owners is a type of insurance that allows home loan borrowers to secure their loved ones with large life cover at affordable premiums. The premiums for these plans can be paid alongside the home loan EMIs, and can cover the policyholder for the home loan tenure. Let us take a look at the home loan term insurance plans and their benefits in India.
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Home loan term insurance or the mortgage reducing term assurance is a type of life insurance especially designed to provide large life cover to the policyholder’s family against the home loan repayment. In case of the policyholder’s untimely demise, the burden of having to pay off the home loan may fall upon the shoulders of the family members. With these plans, your family can use the term insurance benefit amount to pay off the remaining home loan in your absence. This ensures that your family is able to meet their financial needs in your absence, is not burdened with having to pay off the remaining loan, your hard-earned home asset is safe with your family, and can claim tax-free benefit with the term insurance payout.
Term Plans
Here is how buying a term insurance for home loan can benefit you:
Term insurance provides a large sum assured at a relatively low premium. This high coverage can be used to pay off the remaining home loan and support other financial needs, giving your family a strong financial cushion in your absence.
If you have a home loan, your family could be at risk of losing the house if they are unable to repay it after your death. A term insurance plan ensures that your family is not burdened with the debt and can continue living in the home without any disruption.
Term insurance offers financial security by ensuring that your loved ones have the necessary funds to repay the home loan if something happens to you. Whether they choose to pay the entire loan at once or continue with the EMIs, the insurance payout helps protect your home and avoid financial stress.
Term insurance plans often come with optional add-on benefits called term insurance riders, such as critical illness cover, accidental death benefit, or waiver of premium. These riders enhance the overall protection and offer financial support in case of specific emergencies.
The premiums paid towards your policy are eligible for term insurance tax benefits of up to ₹1.5 lakh per year under Section 80C of the Income Tax Act, 1961. Additionally, the death benefit received by your family is tax-free under Section 10(10D), subject to specified conditions. This ensures that your loved ones can use the full amount to repay the loan without any tax deductions.
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Here is how you can use term insurance for home loan protection:
| Criteria | Recommendation |
| Coverage Amount | Equal to or more than outstanding loan |
| Policy Tenure | Match it with home loan tenure |
| Beneficiary | Spouse, parent, or child |
| Premium Payment Option | Yearly/Monthly based on EMI schedule |
| Rider Benefits | Consider critical illness or waiver of premium |
Let us understand how term insurance for home loan works with the help of an example:
Raj, a 35 year old healthy male, took a ₹60 lakh home loan for 20 years. He bought a ₹1 crore term insurance plan for 25 years. He unexpectedly passes away in policy year 10, the term insurance payout helped his wife repay the remaining ₹40 lakh loan, and still had ₹60 lakh left for their child’s future.
To determine the ideal cover amount for your term insurance for home loan, a good rule of thumb will be:
Sum Assured = Home Loan Amount + Other Liabilities + 5–10 years of Family Expenses
Example:If you have a ₹60 lakh home loan, ₹10 lakh in other loans, and annual household expenses of ₹8 lakh:
Recommended Cover = ₹60L + ₹10L + (₹8L x 10) = ₹1.5 Crore
*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.
Let us take a look at the difference between home loan insurance vs term insurance in India:
| Feature | Term Insurance | Home Loan Insurance |
| Payout Beneficiary | Family | Bank |
| Flexibility | High | Low |
| Coverage Amount | Customizable | Loan-specific |
| Continues After Loan Ends | Yes | No |
| Covers Other Expenses | Yes | No |
You should buy a home loan term insurance or a mortgage reducing term assurance plan in the following cases:
When your EMI burden exceeds 30–40% of your income
After marriage or family expansion
When taking a joint loan with spouse or parent
Salaried professionals with long loan tenures
First-time homebuyers with high EMI burdens
Families with single earning members
NRIs with home loans in India
Home Loan Insurance 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: The home loan calculator helps you estimate your home loan requirements.
Home Loan EMI Calculator: The term insurance for home loan EMI calculator helps calculate your EMI based on interest rates like those from HDFC Home Loan or SBI Home Loan Interest Rate.
Term Insurance Calculator: The term insurance premium calculator helps 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!
˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com in the first 6 months of FY 24-25.
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
+Rs. 487/month (Rs.16/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited
We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
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+Rs. 820/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
+Rs. 1,443/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
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