ghanup

Well, when I applied for loan to axis bank, they had it mandatory to take house insurance. I didn't think much and got it, because I was planning to get it anyway. The premium was around 11000/- (one time premium for a period of 20 yrs) and the some assured was around 20 lacs. I didn't read the fine prints though, but I think it covers for natural disaster (flood/earth quake etc) and fire...

ajayg

It would be better if you avoid these combo packs..but if there's no other options(thts the usual case when buyers have no alternate)...I would then do read all hidden terms and conditions/research from internet about this before taking decision.
A flat with a monthly EMI is already costly and if u add insurance costs..it would scale up even further..

Regarding term insurance..I've recently switched from LIC to aviva just for reducing yearly premiums..other options are HDFC/SBI..just search in internet n u'll get lots of options..

amit2222

Ashok4814,


Any day, term plan is better than home insurance plan. However, bank would force you to take home insurance from the same bank as they have tie ups with an insurance company/agent (or have their own company).

There are term insurance plans which will return all the premium paid by you after the policy ends. So you don't end up loosing money for insurance needs while covering the risk involved by increasing your debt liability (as a loan taker).

The other major difference between term plan and home insurance plan is that term plan is for a specific yet fixed sum assured amount (say 20 lacs). And the sum will remain fixed for the entire period of policy (say 20 years). But home insurance works on diminishing or reducing sum assured in relation to your outstanding loan amount (check the attached picture).

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ashok4814

Hi Amit, Thanks for replying. I never heard about the term insurance plan which will return all premium paid by us. Could you please let me know the details of such plan and company's name?

amit2222

Ashok,


Here are the details:
LifeGuard offers a choice of 2 life insurance plans: LifeGuard with Return of Premium and LifeGuard Single Premium.
https://www.iciciprulife.com/public/...d-Benefits.htm

I just happen to know about this as one of my close friend took it from another friend of mine...

Also, see attached picture for a comparison chart of different products.

I suggest you to talk to your bank (HL provider) first before buying any product. Tell them that you are not interested in their insurance product and examine what their response is.

Attached Images

 

Ranjit.jha

I am also in same situation..tossed up bw HL insurance or term insurance... but my bank (HDFC) is not forcing for their insurance....
Their home insurance plan for 30 lac would cost 80k approx and would provide cover for 5 years. It would also cover critical illness..accidental benefits..loss of job(only 3 months EMI)..education of children..damage to building (fire/burglary etc)...
An average term plan for 30 lac cover would cost arnd 5k-6k p.a (For 5 year cover 5x6000 = Rs 30000).

So I believe term insurance would work out lot cheaper...

Can compare different term insurance plans here
http://www.policybazaar.com

ashok4814

Life Guard with return of Premium seems good. The Bank insisting me to take home insurance with loan..saying it's madatory with home loan.. I don't know if any bank has rights to force customer to take Home insurance?

amit2222

Ashok and Ranjit,

I suggest you both to negotiate with your respective bankers and say a strict No to home insurance clubbed by them along with the loan. You tell them that if it is mandatory then I will fetch the insurance cover from some other XYZ company.

Also, please understand the importance of insurance in terms of risk involved in payment of your outstanding loan amount. Your family will come under heavy pressure and might loose an asset in case of any untoward incident. Therefore, please do take insurance cover for the risk whether home insurance policy or term insurance policy.

I have already explained my thoughts on both and feel term insurance is a better choice as it covers you primarily and not the house. In my view, you are more valuable (invaluable) than the house (few lakhs??). So as a person, I would like to cover a relatively bigger risk.

As Ranjit has already provided rates for comparison, it all comes down to whether you would like to take cover with return of premiums after policy term or single premium. Get your risk assessment check from a good advisor before you buy.

useriblur

When I took my first loan from SBI, they said that it is required to go for a Insurance. They also explained why it is required. The reason is to protect our family from the burden of loan repayment if the applicant is no more.

When I went to LIC housing finance for my second loan to buy an appartment in Suncity Gloria, they have not insisted for the Insurance being an insurance company.

That means it is not at all mandatory.

Good luck in your venture.

ashok4814

Thanks to you all for your valueable suggestions..