Home Loan Insurance – Is it Right For You?
Taking out home loan insurance plan can be a good idea. The policy pays out in the case of death, disability or temporary loss of employment. This protects the lender and family from huge financial burden. A pure term insurance plan is ideal for people with low monthly expenses and no dependents. However, you must be careful about what you are insuring. Read on to learn about various options. You can also consider a hybrid option.
The minimum age for home loan insurance is 18 years, while the maximum is 50-60 years. You can take a home loan insurance plan with a single premium or by paying it in EMIs. If you die before the time of the maturity, the insurance provider will reimburse the remaining amount to the lender or to your family. You can keep this policy after paying off your home loan. Then, you can end it once all your debts are cleared.
In addition to life insurance, you can take a home loan protection plan. A home loan protection plan is similar to a term insurance plan, and is purchased by paying one premium. You will pay the premium through EMIs, making it easier to pay. The premium can be paid over time, and the amount is deducted from your loan. This makes paying your premium easy. It is a good way to secure your home.
Depending on your income, a home loan insurance policy can offer tax benefits. In the case of death, the insurer will pay out the full loan amount minus the premium. In the case of disability or loss of job, the insurer will pay out the amount as if you had died before. If you have a low-equity home loan, you may not have as much interest in protecting your home as your lender. This can reduce your EMI.
A home loan insurance policy can protect your outstanding loan liability. In the event that you die unexpectedly, the policy will pay off the outstanding balance. In the case of death, the insurance proceeds are used to repay your outstanding loan. In the case of disability, the policy can also provide tax benefits under Section 80 C. The insurance premiums can be paid in one lump sum or through monthly instalments. It’s up to you.
A home loan insurance policy may be an ideal choice for your needs. While the insured’s income will determine the premium amount, it is still wise to purchase adequate term insurance as well. It is essential to consider the coverage level you need. Choosing a term insurance plan with an adequate sum assured is the best option. If you are eligible, it will protect your family against loss of earnings or other catastrophic events. A term plan will be a good option.